Executive Summary
AutoZone reported a solid Q3 2025, underscoring sustained momentum in domestic commercial (DIFM) and international markets, while sustaining growth through aggressive store network expansion and hub-based fulfillment. Total sales rose 5.4% to $4.46 billion, led by a 10.7% year-over-year increase in domestic DIFM, and an 8.1% constant-currency international comp. Domestic DIY growth remained resilient with a 3% comp, supported by a 1.4% rise in DIY traffic and modest 1% ticket inflation. However, FX headwinds and higher DC ramp costs pressured margins, with gross margin at 52.7% (down ~77 bp YoY) and EBIT down 3.8% YoY, partly offset by a $16 million LIFO credit and ongoing mix shifts toward higher-margin commercial activity. Diluted EPS reached $35.36, down 3.6% YoY, largely due to a roughly $1.10 per share impact from Mexico FX. The quarter also featured meaningful capital allocation activity, including the repurchase of $250 million of AutoZone stock and continued investment in CapEx (~$1.3 billion for the year) to accelerate Hub/MegaHub growth, satellite store expansion, and international store openings. Management remains confident in sustaining top-line momentum into Q4 and beyond, while acknowledging near-term margin headwinds from DC ramp, shrink, and tariff dynamics. The company emphasized disciplined SG&A investment aligned with growth initiatives and a long-run plan to gain market share across domestic and international markets.
Key Performance Indicators
Key Insights
Revenue: USD 4.464B, up 5.4% YoY and 12.96% QoQ; Gross Profit: USD 2.353B, Gross Margin 52.72% (YoY -77bp; net LIFO tailwinds -21bp, ex-LIFO margin headwind ~56bp); Operating Income (EBIT): USD 866.174M, margin 19.40% (YoY -3.78%); Net Income: USD 608.44M, Net Margin 13.62%; EPS (Diluted): USD 35.36, down 3.6% YoY, up 25.02% QoQ; Operating Cash Flow: USD 769.03M; CapEx: USD -345.886M; Free Cash Flow: USD 423.144M; Net Debt: USD 11.605B; Cash & Equivalents: USD 268.625M; Debt: USD 11.873B; Le...
Financial Highlights
Revenue: USD 4.464B, up 5.4% YoY and 12.96% QoQ; Gross Profit: USD 2.353B, Gross Margin 52.72% (YoY -77bp; net LIFO tailwinds -21bp, ex-LIFO margin headwind ~56bp); Operating Income (EBIT): USD 866.174M, margin 19.40% (YoY -3.78%); Net Income: USD 608.44M, Net Margin 13.62%; EPS (Diluted): USD 35.36, down 3.6% YoY, up 25.02% QoQ; Operating Cash Flow: USD 769.03M; CapEx: USD -345.886M; Free Cash Flow: USD 423.144M; Net Debt: USD 11.605B; Cash & Equivalents: USD 268.625M; Debt: USD 11.873B; Leverage (EBITDAR): 2.5x; Inventory per store: +6.7% YoY; Total Inventory: +10.8% YoY; Accounts Payable as % of gross inventory: 115.6%; Share Buyback: USD 250.0M in the quarter; Remaining buyback authorization: USD 1.1B; FX impact (Mexico): Sales headwind ~USD 89M, EBIT headwind ~USD 27M, EPS drag ~USD 1.10; Tax Rate: 19.4% (3Q); FY4Q guidance: Tax rate ~23.2%, forward FX scenarios imply ~$50M revenue drag, ~$20M EBIT drag and ~USD 0.80 per share EPS drag if spot rates persist.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.46B |
5.40% |
12.96% |
| Gross Profit |
2.35B |
3.88% |
10.58% |
| Operating Income |
866.17M |
-3.78% |
22.55% |
| Net Income |
608.44M |
-6.64% |
24.70% |
| EPS |
36.33 |
-3.71% |
25.02% |
Management Commentary
Themes and quotes from management: 1) Strategy & Growth: 'Commercial sales were up 10.7% year-over-year... first double-digit quarter for commercial growth since Q2 FY '23' and 'eclipsed the $5 billion sales mark on commercial' (Philip Daniele). 2) Execution & Network: 'We opened 54 net domestic stores... MegaHub stores are a key component of our current and future commercial growth. We finished Q3 with 119 MegaHub stores' (Jamere Jackson). 3) International & FX: 'FX headwinds were meaningful in Mexico... an $89 million headwind to sales and $27 million to EBIT' (Jamere Jackson); 'our international comp was up 8.1% on a constant currency basis' (Philip Daniele). 4) Margin dynamics & Tariffs: 'gross margin was 52.7%, down due to DC ramp-up, shrink, and domestic/commercial mix; a $16 million LIFO credit was taken this quarter as freight costs trend lower' (Jamere Jackson); 'minimal tariff impact this quarter, but actions such as vendor absorption, supplier diversification, and pricing actions may offset Q4 tariff costs' (Jamere Jackson). 5) Capital allocation: 'We repurchased $250 million of AutoZone stock in the quarter; $1.1B remaining under buyback authorization' (Philip Daniele).
Commercial sales were 10.7% year-over-year... first double-digit quarter for commercial growth since the second quarter of FY '23. We also eclipsed the $5 billion sales mark on commercial.
â Philip Daniele
We repurchased $250 million of AutoZone stock in the quarter. And at quarter end, we had $1.1 billion remaining under our share buyback authorization.
â Philip Daniele
Forward Guidance
Near-term outlook remains constructive with solid DIY and commercial momentum into Q4, aided by an easier comparison backdrop. Management projects continued top-line strength from ongoing initiatives (Hub/MegaHub deployment, assortments, improved delivery speed) and a resilient DIY base. Quantitative guidance/implications include: - FX scenario: If current spot rates hold, ~USD 50 million revenue drag, ~USD 20 million EBIT drag, and ~USD 0.80 per share EPS drag in Q4. - Tariff risk: Tariff-related costs may be mitigated via vendor absorption, sourcing diversification, and pricing actions; no material gross-margin impact expected in the near term if mitigation is effective. - Margins: Expect gross margins to be down slightly in Q4 versus Q3 from DC ramp and shrink, with some offset from merchandise margin improvements and ongoing commercial mix benefits; SG&A will continue to be invested to support growth but managed to align with sales progression. - Capex: Approximately USD 1.3 billion in capex for FY25, including accelerated Hub/MegaHub openings and distribution-center expansion; 2 new DCs opened this year and ongoing investment in technology to support WOW! Customer Service. - International: Expect continued contribution as international stores scale toward roughly 100 openings for the year and a growing share outside the U.S.Overall, the investment cycle is in the early innings; the company aims to translate top-line acceleration into durable earnings growth over multiple quarters and years, supported by strong free cash flow generation and disciplined capital allocation.