AutoZone 2026 Q1 Earnings Net Income Declines 6.0% Despite Revenue Growth

AutoZone (AZO) reported mixed results for fiscal 2026 Q1 on Dec 9, 2025, with revenue rising 8.2% to $4.63 billion but earnings per share (EPS) and net income declining. The company guided to continued store expansion and operational investments, while analysts revised expectations ahead of the earnings release.

Revenue

The total revenue of AutoZone increased by 8.2% to $4.63 billion in 2026 Q1, up from $4.28 billion in 2025 Q1.

Earnings/Net Income

AutoZone's EPS declined 4.6% to $31.88 in 2026 Q1 from $33.40 in 2025 Q1. Meanwhile, the company's net income declined to $530.82 million in 2026 Q1, down 6.0% from $564.93 million reported in 2025 Q1. Remarkably, the company has sustained profitability for more than 20 years over the corresponding fiscal quarter, underscoring strong operational resilience. Despite revenue growth, the EPS and net income declines highlight margin pressures and operational challenges.

Price Action

The stock price of AutoZone has dropped 5.36% during the latest trading day, has tumbled 8.62% during the most recent full trading week, and has dropped 4.82% month-to-date.

Post-Earnings Price Action Review

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

CEO Commentary

Philip Daniele, CEO of AutoZone, highlighted strong sales growth driven by domestic commercial sales acceleration (14.5% YoY) and improved execution, while acknowledging challenges like the noncash $98 million LIFO charge impacting margins and EPS. He emphasized investments in store expansion (53 global openings in Q1), Hubs/Mega-Hubs, and supply chain efficiency, stating, “We are investing nearly $1.6 billion in CapEx to drive strategic growth priorities.” Daniele expressed optimism about FY 2026, noting resilience in DIY and commercial sales, with confidence in long-term market share gains. He underscored a focus on “flawless execution” and customer service, calling FY 2026 “a marathon, not a sprint,” while reiterating commitment to international expansion and operational discipline.

Guidance

AutoZone guided to 350–360 global store openings in FY 2026 (vs. 304 in FY 2025), with Q2 openings of 65–70 stores. The company expects $60 million LIFO charges per quarter for the next three quarters, impacting gross margins by ~140 bps and EPS by ~$2.70/share. Foreign exchange rates are projected to provide a $57 million revenue and $0.77/share EPS benefit in Q2. CAPEX remains at ~$1.6 billion annually, with SG&A growth aligned with accelerated store openings. Operating margins are expected to stabilize post

Additional News

Recent analyst activity highlights mixed sentiment ahead of Q1 earnings. Goldman Sachs upgraded AZO to Buy with a $4,262 price target, while BMO Capital raised its target to $4,600. Truist and Morgan Stanley also adjusted targets upward, reflecting confidence in long-term growth. However, shares fell 1.5% pre-announcement, pressured by margin concerns and elevated CapEx. Analysts noted AutoZone’s resilience in DIY and commercial sales as key strengths, though LIFO charges and FX volatility remain near-term risks. No material M&A, C-level changes, or dividend/buyback updates were disclosed in the three weeks preceding Dec 9, 2025.