AutoZone (AZO) Q2 2026 earnings summary

Executive summary

• Net sales grew 8.1% year-over-year to $4.3 billion in Q2 FY26, with domestic same-store sales up 3.4% and international same-store sales up 17.1% in constant currency.

• Earnings per share (EPS) decreased 2.3% to $27.63 due to a non-cash $59 million LIFO charge; excluding this, EPS would have risen 7.1%.

• Domestic commercial sales grew 9.8% year-over-year to $1.15 billion, while DIY same-store sales increased 1.5%.

• 64 net new stores opened globally in Q2, bringing the total store count to 7,774.

• Severe winter weather negatively impacted sales, especially in the last four weeks of the quarter, but underlying trends remain strong.

Financial highlights

• Gross margin declined 137 basis points to 52.5%, mainly due to a 138 basis point non-cash LIFO charge.

• EBIT was $698 million, down 1.2% year-over-year; EBIT margin fell to 16.3%.

• Net income was $469 million, down 3.9% year-over-year.

• Free cash flow for Q2 was $15 million, down from $291 million last year, due to CapEx and payables timing.

• Inventory per store increased 8.1% year-over-year, with total inventory up 13.1%.

Outlook and guidance

• Management targets 350-360 new store openings for the full fiscal year and expects mid-single-digit same SKU inflation through Q3 and into Q4.

• LIFO charges of ~$60 million are planned for each of the next two quarters.

• Q3 guidance includes opening 90-95 stores globally and interest expense around $112 million.

• Anticipate benefits from merchandise margins to help offset commercial mix headwinds.

• Expect top-line and EBIT growth to accelerate in FY 2027 and FY 2028 as new stores mature.