El primer trimestre de 2026 en AutoZone: Surgen contradicciones en las proyecciones de inventario por costo, en el crecimiento de los costos generales y administrativos, y en el impacto de las tarifas arancelarias.

Financials Results

• Revenue: $4.6B, up 8.2% YOY
• EPS: $31.04 per diluted share, down 4.6% YOY (would have been up 8.9% excluding $98M LIFO charge)
• Gross Margin: 51%, down 203 basis points YOY (would have been up 9 basis points excluding LIFO charge)

Guidance:

• Store openings: 65-70 globally in Q2 vs 45 last year; 350-360 for FY'26 vs 304 in FY'25.
• SG&A growth: Expected to be similar to Q1 in Q2; will manage in line with sales growth as stores mature.
• Earnings and cash flow: Expect continued strong generation; LIFO charge of ~$60M per quarter for next 3 quarters.
• Tax rate: ~22.5% for Q2.
• International currency benefit: ~$57M revenue, $18M EBIT, $0.77 EPS tailwind if Q2 rates hold.
• LIFO impact on Q2: Reduce EBIT by ~$60M, EPS by ~$2.70, gross margin by ~140 bps.
• Store growth: Accelerate to 500 annually by FY'28.
• Target 300 Mega-Hubs at full build-out.

Business Commentary:

* Sales and Earnings Performance: - AutoZone reported total sales of $4.6 billion for Q1 2026, up 8.2% year-on-year, while earnings per share decreased by 4.6%. - Excluding a non-cash $98 million LIFO charge, EPS would have increased by 8.9%. Domestic same-store sales grew by 4.8%, and international same-store sales were up 3.7% on a constant currency basis.

• Commercial and DIY Sales Growth:
• Domestic commercial sales increased by 14.5%, driven by improved inventory, satellite store investments, and enhanced delivery speed.

• Domestic DIY same-store sales grew by 1.5%, impacted by less favorable weather comparisons and the absence of hurricane-driven sales from the previous year.

• International Business and Store Openings:

• International same-store sales grew by 3.7% on a constant currency basis, with 1,044 international stores across Mexico and Brazil.

• The company opened 53 stores globally in Q1, marking a near-record for first-quarter openings and reflecting a commitment to accelerated store growth.

• Gross Margin and LIFO Impact:

• Gross margin was 51%, down 203 basis points year-on-year, primarily due to a $98 million LIFO charge impacting margins and EPS.

• Excluding LIFO, gross margin improved by 9 basis points due to margin actions, offsetting a significant rate headwind from the shift to a faster-growing commercial business.

• SG&A and Investment Strategy:

• SG&A expenses grew by 10.4% year-on-year, driven by investments to support growth initiatives and the acceleration of store openings.
• The company plans to continue increasing new store openings, with expectations to open 350 to 360 stores globally in FY '26, investing in supply chain and distribution centers to support growth.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed excitement about growth prospects: "We are very pleased with our results thus far" and "We are encouraged by our continued improved sales results." They noted strong commercial acceleration, record store openings, and investment in strategic growth. Forward-looking statements are optimistic: "We are bullish on our growth prospects" and "We believe AutoZone's best days are ahead of us."

Q&A:

• Question from Bret Jordan (Jefferies): Could you talk about the maturation schedule of the new stores and SG&A expense/return, including DC investments?
  Response: New stores mature in 4-5 years; SG&A growth includes ~2 points from new stores/programs, peaks with 500 stores in FY'28, then laps off. Supply chain investments (e.g., new DCs in Mexico, Brazil) are underway to support growth.

• Question from Bret Jordan (Jefferies): Could you parse out commercial growth (national vs. domestic)?
  Response: Commercial growth is across all segments (national accounts, local 'up and down the street' shops, verticals/associations), with share gains in each.

• Question from Barath Rao (JPMorgan): On DIY slowdown, how much was due to government shutdown vs. demand deterioration?
  Response: No demand deterioration; the middle 4-week segment weakness was due to unfavorable weather comparisons (colder snap last year, hurricane benefits last year) and not consumer-related.

• Question from Barath Rao (JPMorgan): How does SG&A per store growth curve throughout the year and into next year?
  Response: SG&A per store growth will be in the same ZIP code as Q1 (~5.9%); investment continues as store growth accelerates in the back half, but will manage expenses in line with sales over time.

• Question from Skylar Tennant (Morgan Stanley): Is the consumer showing price elasticity or trade-down?
  Response: Lower-end consumer stable under pressure for >2 years; higher-end stable. Trade-down is minimal due to product specificity; some good/better/best opportunities in batteries/brakes but not significant.

• Question from Skylar Tennant (Morgan Stanley): How is inflation impacting product catalog and demand elasticity?
  Response: Inflation expected to increase through Q3, then lap tariff impacts in Q4. Discretionary categories (16-17% of market) have stabilized and slightly improved over last year.

• Question from Unknown Analyst (UBS): How sustainable is domestic same-store sales momentum with tougher comparisons in Q3/Q4?
  Response: Comps may moderate slightly but expect stable growth and continued market share gains in DIY and commercial.

• Question from Unknown Analyst (UBS): How will sales vs. SG&A growth gap unfold, and is model reliant on gross margin recovery to 19%+?
  Response: SG&A growth slightly outpaces sales now but will align as stores mature; model relies on adding back ~3.5 points from LIFO and SG&A ramp to reach ~20% operating margin.

• Question from Unknown Analyst (Truist): Why were LIFO charges lower and could that taper inflation expectations?
  Response: Lower LIFO due to vendor negotiations, sourcing diversification, and 10% tariff rollback; still expect higher costs from tariffs impacting ticket and comps.

• Question from Ariana Warden (Citi): Can you give color on merch margin performance and outlook?
  Response: Merch margin strong in Q1 (up 9 bps excluding LIFO) offsetting commercial mix drag; will continue running playbook to mute headwind.

• Question from Mark Jordan (Goldman Sachs): What drove difference in same SKU inflation between retail and commercial?
  Response: Mix of products: commercial has higher hard part and newer, more expensive SKUs.

• Question from Mark Jordan (Goldman Sachs): Which product categories were stronger/weaker and is discretionary improving?
  Response: Failure/maintenance categories strongest; discretionary weaker but have bottomed and are slightly growing YOY.

• Question from Michael Montani (Evercore): What drove strong merch margin and how does it offset mix headwind?
  Response: Merch margin gains from alternate sourcing, new brands, and moving to house brands; teams executing well to offset commercial mix drag.

• Question from Yanjun Liu (Bank of America): Expectations for early calendar 2026 with weather, tax refund tailwinds?
  Response: Good weather setup (cold winter, snow/ice) beneficial for undercar and battery sales; Q2 volatile; tax refund impact timing uncertain.

• Question from Justin Kleber (Baird): Should SG&A per store growth continue at 5.9% pace?
  Response: Yes, per store SG&A growth expected in same ZIP code; back half sees accelerated store growth.

• Question from Justin Kleber (Baird): Is international 2-year stack stable, driven by Brazil?
  Response: International trends expected stable; sales to accelerate as economies improve and share gains continue in DIY and commercial.

Contradiction Point 1

LIFO Charge and Inflation Outlook

A direct contradiction in the forecast for inflationary headwinds and LIFO charges, a key cost metric. Q1 2026 guidance indicates a significant moderation (~25% reduction in headwind) and a future lap of impacts, contrary to the Q4 2025 expectation of continued and potentially increasing pressure. This is a change in a core financial forecast.

Was the lower-than-expected LIFO charge and ~25% reduced headwind due to tariff reductions or mitigation efforts? Could this lead to a lower upper end for same SKU inflation expectations? - Unknown Analyst (UBS, on for Michael Lasser)

20251209-2026 Q1: Inflation (including tariffs) is expected to continue increasing through Q3, then lap some impacts in Q4... LIFO charges were less than expected this quarter and the headwind for the next three quarters was lowered by ~25%. - Jamere Jackson(CFO) and Philip Daniele(CEO)

How will LIFO charges trend from here? Should the Q1 $120M charge be annualized to ~$520M, or will it peak and fade? How will margins evolve as the LIFO charges fade? - Michael Lasser (UBS)

2025Q4: The company expects inflation to be at least 3% and likely increase from there... A ~$120M LIFO charge is expected for Q1, with pressure continuing in subsequent quarters... - Philip Daniele(CEO) and Jamere Jackson(CFO)

Contradiction Point 2

SG&A Growth Trajectory and Normalization Timeline

Contradiction regarding the expected pace and timeline for SG&A growth to align with sales growth. The shift from an "accelerated pace for the next few quarters" (2025Q2) to a long-term strategy of SG&A "slightly outpacing sales growth" (20251209-2026 Q1) fundamentally alters the near-to-medium term margin model and investment horizon.

How will the 2-3 percentage point gap between SG&A growth and sales growth since FY2024 evolve? Is the model relying on gross margin recovery to return to 19%+ operating margins? - Unknown Analyst (UBS, on for Michael Lasser)

20251209-2026 Q1: SG&A growth is purposeful to create a faster-growing business. Over time, SG&A will slightly outpace sales growth but will be managed in line with sales as stores mature. - Jamere Jackson(CFO)

How long will it take for SG&A growth to align with sales growth? - Seth Basham (Wedbush)

2025Q2: The company expects to invest at an accelerated pace for the next few quarters to capitalize on market opportunities. - Jamere Jackson(CFO)

Contradiction Point 3

Tariff Impact and Mitigation Strategy Confidence

A shift in the characterization of the company's ability to manage tariff costs. The narrative changes from a confident assertion that mitigation will maintain the margin profile (2025Q2) to attributing lower inflation specifically to successful playbook execution and external tariff reductions (20251209-2026 Q1). This indicates a change in the perceived source and certainty of cost control.

LIFO charges were below expectations this quarter and reduced headwinds for the next three quarters by ~25%. Is this due to tariff reductions or focused mitigation efforts? Could this reduce the upper end of same-SKU inflation expectations? - Unknown Analyst (Truist, on for Scott Ciccarelli)

20251209-2026 Q1: Two factors contributed: 1) The company has been successful in negotiating lower vendor costs, diversifying sources, and raising retails as part of a 'playbook,' leading to less cost inflation than anticipated. 2) The announced reduction of IEEPA tariffs from 20% to 10% on China imports. - Jamere Jackson(CFO) and Philip Daniele(CEO)

What is the break point for maintaining margin rates despite tariffs? - Seth Basham (Wedbush)

2025Q2: The company intends to maintain its margin profile post-tariffs and expects the industry to behave rationally, based on historical experience... - Jamere Jackson(CFO)

Contradiction Point 4

Characterization of Lower-Income Consumer Pressure

A notable shift in the assessment of the lower-income consumer's health and immediate outlook. The description changes from the consumer "remains under pressure" (2025Q2) to being "stable under pressure" with confidence in continued share gains (20251209-2026 Q1). This impacts views on market growth sustainability and potential trade-down behavior.

Are consumers showing signs of price elasticity or trade-down? - Skylar Tennant (Morgan Stanley, on for Simeon Gutman)

20251209-2026 Q1: The lower-end consumer has been stable under pressure for over two years... The company is confident in continued market share growth for both DIY and commercial. - Philip Daniele(CEO)

What role did weak demand from lower-income consumers play in the flat DIY performance over the past year? And do you expect any improvement in lower-income consumer demand over the next few quarters? - Zachary Fadem (Wells Fargo)

2025Q2: The lower-income consumer remains under pressure due to high inflation, including auto repair costs. - Philip Daniele(CEO)

Contradiction Point 5

SG&A Growth and Operating Margin Model

This represents a subtle but important shift in the strategic rationale for SG&A growth. The framing evolves from an investment with a clear "maturity period" (4-5 years) during which it drags margins (2025Q4) to a more nuanced model where SG&A is managed to slightly outpace sales as part of creating a faster-growing business (20251209-2026 Q1). This changes the implied timeline and mechanism for margin leverage.

How will the SG&A growth outpacing sales by 2-3 percentage points on average since FY2024 begin evolve? Does the model rely on recouping gross margin headwinds to return to 19%+ operating margins? - Unknown Analyst (UBS, on for Michael Lasser)

20251209-2026 Q1: SG&A growth is purposeful to create a faster-growing business. Over time, SG&A will slightly outpace sales growth but will be managed in line with sales as stores mature. - Jamere Jackson(CFO)

Was the higher SG&A growth this quarter due to an industry "arms race" for market share or increased operating costs? - Michael Lasser (UBS)

2025Q4: New stores have a maturity period (4-5 years) during which they drag SG&A before leveraging it. This investment is expected to create a faster-growing business. - Jamere Jackson(CFO)