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.

• Diluted EPS decreased 2.3% to $27.63, impacted by a $59 million non-cash LIFO charge; excluding this, EPS would have risen 7.1%.

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

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

• Management remains focused on disciplined growth, targeting 350-360 new store openings for the full fiscal year.

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; adjusted for LIFO, EBIT would have grown 7.2%.

• 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, mainly due to CapEx and payables timing.

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

Outlook and guidance

• Expect continued mid-single-digit same SKU inflation through Q3 and most of Q4, with ticket growth peaking in Q4.

• Anticipate opening 90-95 stores globally in Q3 and 350-360 for the full year.

• LIFO charges expected to be ~$60 million per quarter for the remainder of FY 2026.

• Foreign currency expected to provide a $75 million revenue and $0.85 EPS tailwind in Q3 if current rates hold.

• Management expects to increase investment in growth initiatives, including new stores and hub expansions.