AutoZone (AZO) Q4 FY2026 Earnings: Same-Store Sales Slow, Profit Leans on Tariff Refund

AutoZone reported fiscal 2026 fourth-quarter results on September 22, 2026, covering the 16 weeks ended August 29, 2026, in an earnings release and on its earnings call. Revenue growth slowed markedly, and the growth in reported profit rested on one-time items [1][2]. Three questions had been open going into the quarter: whether the Commercial channel could keep driving total growth while DIY stayed weak, whether merchandise margin and expense leverage could offset LIFO, tariffs and expansion costs, and whether the faster store build would weigh on cash conversion before new stores matured. The quarter answered them this way. Commercial still led, but domestic same-store sales slowed to 1.6%, DIY turned negative, and total growth eased from 8.4% to 5.6%. Gross margin and operating-profit growth came in above the prior baseline, but mainly because of a tariff refund of about $96 million and a favorable LIFO swing; without them, profit growth was thin. Operating cash flow grew 4.7%, yet free cash flow was flat at about $1.8 billion, and a fiscal 2027 plan of roughly 430 new stores and about $1.65 billion of capital spending keeps cash conversion dependent on new-store maturation [1][2].

AutoZone sells automotive replacement parts through stores in the United States, Mexico and Brazil, with 8,031 stores at August 29, 2026 [1]. Its customers are do-it-yourself consumers and repair shops that get fast delivery and credit through its commercial programs; profit depends on the gap between merchandise margin and the cost of stores, delivery and expansion [1].

Domestic same-store sales slowed to 1.6%, narrowing growth to commercial programs and new stores

Total growth ran well below the prior baseline this quarter. Net sales were $6.595 billion, up 5.6% year over year, after 8.4% growth in the prior quarter; domestic same-store sales grew 1.6%, after 4.1% in the prior quarter [1][3]. Management said DIY same-store sales fell 0.6% and DIY transactions fell more than 5%, citing milder early-quarter temperatures, lower foot traffic, and inflation that pushed customers to defer purchases and trade down [2].

The Commercial channel kept leading. Domestic commercial sales were $1.913 billion, up 8.6%, ahead of total growth and domestic same-store sales but below the 10.4% of the prior quarter [1][3]. Average sales per commercial program per week rose only 2.7%, against 9.0% a year earlier, so this quarter's commercial growth came mainly from the program count rising from 6,098 to 6,443 [1]. New stores were the one driver that beat plan: the company opened 374 stores in the fiscal year, above its plan of 355 to 365 [1][3]. For fiscal 2027, management guided domestic same-store sales to flat to low single-digit growth, with about 4% of that from ticket inflation, commercial sales to high single-digit to low double-digit growth, and new stores to about 430 [2].

Reported margin rose, but profit conversion weakened once the tariff refund and LIFO are removed

Gross margin and operating-profit growth beat the baseline this quarter, but mostly on factors that do not repeat. Gross margin was 53.3%, up 182 basis points year over year; tariff refunds contributed 145 basis points and a favorable LIFO swing 105 basis points, partly offset by dilution from a higher commercial mix, which works out to about 68 basis points by arithmetic from the disclosed figures [1][2]. Operating expenses were 33.4% of sales, against 32.4% a year earlier, as SG&A grew 8.9%, faster than the 5.6% sales growth; the company attributed the deleverage to growth initiatives [1][2].

Operating profit was $1.317 billion, up 10.1%, after 6.6% growth in the prior quarter; excluding the tariff refund it would have been about $1.221 billion, up about 2.1% [1][4]. For the full fiscal year, operating profit grew only 3.1%, below the 7.4% growth in sales, and gross margin of 52.3% was below the prior year's 52.6% [1]. The chief financial officer called the tariff refund a one-time benefit and guided fiscal 2027 gross margin to flat to up 25 basis points excluding LIFO and tariff swings, with LIFO charges expected at $85 million to $90 million, about $40 million of that in the first quarter, and SG&A growth of 8.5% to 9% [2].

Conclusion

This set of results separates growth, profit and cash. The growth engine is weaker and narrower: established-store demand slowed, commercial growth relied on adding programs, and new stores became the main source of growth. Profit conversion improved on paper but weakened underneath, with full-year operating-profit growth less than half the rate of sales growth. Cash generation still held: full-year operating cash flow was $3.303 billion, up 4.7% and faster than operating profit, but capital spending of $1.496 billion absorbed the entire increase, and accounts payable as a share of inventory fell from 114.2% to 111.1% [1].

The slowdown, the expense deleverage and the flat free cash flow are realized results. A DIY recovery, a flat gross margin and lower capital intensity are management's expectations [2]. What to look for next: whether domestic same-store sales stay positive with roughly 4% ticket inflation, whether sales per commercial program recover, and whether gross margin and the expense ratio meet guidance once one-time items are excluded.

Sources

[1] AZO FY2026 Q4 earnings release 2026-09-22 — AutoZone fiscal 2026 fourth quarter earnings release, Form 8-K, 2026-09-22, https://www.sec.gov/edgar/browse/?CIK=866787&owner=exclude [2] AZO FY2026 Q4 earnings call summary 2026-09-22 — AutoZone fiscal 2026 fourth quarter earnings call summary, earnings call, 2026-09-22, https://www.autozone.com/investors [3] AZO FY2026 Q3 earnings release 2026-05-26 — AutoZone fiscal 2026 third quarter earnings release, Form 8-K, 2026-05-26, https://autozone.gcs-web.com/news-releases/news-release-details/autozone-3rd-quarter-total-company-same-store-sales-increase-39 [4] AZO FY2026 Q3 10-Q filed 2026-06-12 — AutoZone fiscal 2026 third quarter Form 10-Q, 2026-06-12, https://www.sec.gov/edgar/browse/?CIK=866787&owner=exclude