Autozone 2026 Q1 Earnings Misses Expectations with 6.0% Net Income Drop

AutoZone (AZO) reported fiscal 2026 Q1 earnings on Dec 9, 2025, missing Wall Street expectations with EPS of $31.04 against a projected $32.24. The company guided to $60M quarterly LIFO charges and FX benefits, signaling disciplined SG&A growth aligned with store expansion.

Revenue

AutoZone’s total revenue rose 8.2% to $4.63 billion in 2026 Q1, surpassing $4.28 billion in 2025 Q1. This growth reflects strong domestic commercial sales acceleration (14.5%) and 4.8% same-store sales, though weather disruptions and hurricane comparisons tempered mid-quarter results.

Earnings/Net Income

Net income declined 6.0% to $530.82 million in 2026 Q1, down from $564.93 million in 2025 Q1, with EPS falling 4.6% to $31.88. Despite the decline, the company has maintained profitability for over two decades, showcasing resilience in operational execution.

Price Action

AZO’s stock dropped 5.36% in the latest trading day, 8.62% for the week, and 4.82% month-to-date, reflecting market sensitivity amid post-earnings volatility.

Post-Earnings Price Action Review

The strategy of buying AZO when its revenue misses expectations and selling after 30 days delivered moderate performance, achieving a 39.07% return but trailing the benchmark by 3.73%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.79, the approach indicated low risk, though 15.05% volatility underscored market sensitivity.

CEO Commentary

CEO Philip Daniele highlighted strategic priorities including 53 new global stores in Q1, supply chain investments, and technology enhancements. He emphasized confidence in FY26 growth despite near-term headwinds, with 350–360 stores expected to open globally.

Guidance

AutoZone anticipates $1.6 billion in CAPEX for FY26, with LIFO charges impacting gross margins by ~140 bps and EPS by ~$2.70/share. FX is projected to provide $57M revenue and $18M EBIT benefit in Q2, with EPS support of $0.77/share. Operating margins are expected to stabilize as new stores mature.

Additional News

AutoZone announced a strategic focus on share repurchases, emphasizing value creation through buybacks when priced appropriately. The company also highlighted growth initiatives, including hiring equity analysts and marketing professionals to support expansion. Recent analyst price targets suggest optimism, with a $4,576 average target versus the current $3,826 share price.