Executive Summary
AutoZone reported Q1 FY2025 revenue of $4.2796 billion, up 2.1% year over year on a total sales basis, aided by stronger international performance but pressured by foreign exchange headwinds. Management highlighted that the first quarter would be similar to the prior quarter with muted domestic DIY comps and FX-driven pressure on reported results. Domestic DIY was down 0.4%, while domestic commercial grew 3.2% and, on a two-year basis, commercial was up 9%. International sales grew strongly in local currencies (about 14% in constant currency), but reported results were damped by roughly 1,300 basis points of FX headwind. The company indicated ongoing investment in store formats (hub and mega-hub expansion), inventory proximity to customers, and IT/capex as levers to drive future growth. Management signaled modest sequential improvements in DIY and commercial trends in Q2 as easier year-over-year comparisons appear, with a broader long-term plan to invest over $1 billion in capital expenditures to accelerate growth. Free cash flow remained robust at $565 million for the quarter, supporting a continued buyback program (about $505 million repurchased in the quarter) and a remaining authorization of $1.7 billion. The earnings call underscored a disciplined approach to capital allocation, a focus on WOW! Customer Service, and confidence in gaining market share across DIY, commercial, and international channels.
Key Performance Indicators
QoQ: -31.03% | YoY:10.90%
QoQ: -35.13% | YoY:13.17%
Key Insights
Revenue: $4.2796B in Q1 2025, YoY growth 10.9%, QoQ decline -31.0%. Gross margin: 53.0% (about 0.53). Operating income: $841.15M, margin ~19.65%. Net income: $564.93M; net margin ~13.20%. EPS: $32.52. Weighted average shares (diluted): 17.37M. Operating cash flow: $811.80M; free cash flow: $564.77M. Capital expenditure: $247.04M; cash capex coverage: robust. Cash balance: $304.02M. Total assets: $17.47B; total liabilities: $22.14B; stockholders’ equity: negative $4.67B. Net debt: $11.96B; leve...
Financial Highlights
Revenue: $4.2796B in Q1 2025, YoY growth 10.9%, QoQ decline -31.0%. Gross margin: 53.0% (about 0.53). Operating income: $841.15M, margin ~19.65%. Net income: $564.93M; net margin ~13.20%. EPS: $32.52. Weighted average shares (diluted): 17.37M. Operating cash flow: $811.80M; free cash flow: $564.77M. Capital expenditure: $247.04M; cash capex coverage: robust. Cash balance: $304.02M. Total assets: $17.47B; total liabilities: $22.14B; stockholders’ equity: negative $4.67B. Net debt: $11.96B; leverage (EBITDA-based): ~2.5x. Inventory at period-end: $6.27B; DSO: 11.22 days; DIO: 280.71 days; CCC: -43.57 days. Domestic stores opened: 23 net; international stores: 932; international comp (constant currency): ~13.7%. Company reiterated plan to invest >$1.0B in CapEx for growth initiatives, including hubs/mega-hubs, distribution modernization, and inventory proximity.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.28B |
10.90% |
-31.03% |
| Gross Profit |
2.27B |
9.06% |
-30.38% |
| Operating Income |
841.15M |
13.17% |
-35.13% |
| Net Income |
564.93M |
9.69% |
-37.38% |
| EPS |
32.52 |
9.35% |
-38.62% |
Key Financial Ratios
operatingProfitMargin
19.7%
operatingCashFlowPerShare
$46.73
freeCashFlowPerShare
$32.51
Management Commentary
Key insights from management discussions during the QQ1 2025 earnings call:
- FX headwinds and international exposure: “FX rates weakened 13% versus the U.S. dollar for the quarter, resulting in a $58 million headwind to sales, a $17 million headwind to EBIT and a $0.68 a share drag on EPS.” This underscores the challenge of currency translation on reported results and the elevated importance of the international core in driving long-term growth.
- Hub/Mega-Hub expansion and near-term execution: “We have now set a new objective to have just under 300 mega-hubs at full buildout.” The strategy is designed to bring inventory closer to customers and lift both DIY and commercial sales in the regions served by these hubs.
- Capex and capital allocation: “This year we expect to again invest more than $1 billion in CapEx,” reflecting a prioritization of growth assets, including hubs, mega-hubs, and distribution enhancements. Management highlighted the intent to leverage technology and supply chain improvements to unlock higher service levels and productivity.
- International performance and timing: “We are bullish on international being an attractive and meaningful contributor to AutoZone's future sales, and operating profit growth.” The company opened 11 international stores (Mexico and Brazil combined) in the quarter, finishing with 932 international stores and a 13% constant currency SSS growth.
- Shareholder value and balance sheet discipline: “We repurchased $505 million of AutoZone stock in the quarter, and at quarter end we had $1.7 billion remaining under our share buyback authorization.” This reinforces a disciplined but opportunistic approach to returning cash while maintaining financial flexibility.
FX rates weakened 13% versus the U.S. dollar for the quarter, resulting in a $58 million headwind to sales, a $17 million headwind to EBIT and a $0.68 a share drag on EPS.
— Jamere Jackson
We now plan to have more than 285 domestic hubs or mega-hubs. These stores do take time, but we are incredibly excited about their continued performance.
— Phil Daniele
Forward Guidance
Management provided currency-translation guidance: if yesterday's spot rates hold for Q2, AutoZone expects approximately a $95 million drag to revenue, a $30 million drag to EBIT, and a $1.30 per share drag to annualized FY25 EPS. If current spot rates persist for the full fiscal year, the anticipated impact increases to roughly $355 million on revenue, $120 million on EBIT, and about $4.90 per share on FY25 EPS. The company also signaled modest sequential improvement in DIY and commercial trends in Q2 due to easier comparisons and ongoing sales growth initiatives, plus continued acceleration of Hub/Mega-Hub deployment and international expansion. Investors should monitor FX hedging effectiveness, store openings cadence (domestic and international), capex execution, and the pace of same-store sales recovery in Rust Belt markets, where weather and macro headwinds have been persistent but are expected to ease as 2025 progresses.