AutoZone (AZO) Stock Plunges 9% Despite Strong Q3 Earnings Performance

Key Highlights

• The company reported diluted EPS of $38.07 for Q3, exceeding the analyst consensus of $36.18
• Revenue climbed 8.4% annually to $4.84 billion but fell shy of the $4.86 billion projection
• Comparable store sales in the U.S. increased 4.1%; company-wide comps rose 3.9% in constant currency
• International comparable sales advanced only 1.6% on a constant-currency basis amid weakness in Mexico and Brazil
• The retailer added 82 net stores during the quarter, expanding its global presence to 7,856 locations

AutoZone delivered a robust earnings performance in its third fiscal quarter, yet shares tumbled 9.10% as the company’s revenue results narrowly missed analyst projections.

AutoZone, Inc., AZO

The automotive parts retailer announced diluted earnings of $38.07 per share for the 12-week period concluding May 9, 2026. This figure exceeded the $36.18 consensus forecast compiled by Zacks from 11 Wall Street analysts.

Revenue reached $4.84 billion, representing an 8.4% increase compared to the same period last year. Nevertheless, Wall Street had anticipated $4.86 billion, resulting in AutoZone falling slightly short on its top-line performance.

The quarter generated net income of $641.5 million. Operating profit expanded 6.6% to reach $923.8 million, elevating the operating margin beyond 19%.

Gross margin stood at 52.2% of sales, representing a 57 basis point contraction from the prior-year period. Management attributed this compression primarily to a 77 basis point non-cash LIFO charge, which was partially counterbalanced by operational improvements.

Operating expenses as a proportion of revenue showed modest improvement, declining to 33.1% from 33.3% in the year-ago quarter. The company highlighted strong sales performance and disciplined expense control as drivers of this efficiency gain.

U.S. Operations Show Consistent Growth

Both retail and professional customer segments demonstrated growth in the domestic market throughout the quarter. U.S. comparable store sales advanced 4.1%, while total company comparable sales increased 3.9% when measured in constant currency.

CEO Phil Daniele noted in his statement that growth was balanced across all customer categories. The company did not provide a detailed breakdown separating DIY customers from commercial accounts.

Foreign Markets Present Challenges

International comparable store sales jumped 16.6% on a reported basis, but this figure drops dramatically to just 1.6% when adjusted for currency fluctuations.

Performance in Mexico and Brazil fell short of the company’s internal expectations. While Daniele acknowledged these disappointing results, he maintained that AutoZone is still capturing additional market share in both regions.

The company expanded its footprint by 82 net new stores globally during the quarter. The United States accounted for 57 openings, Mexico contributed 20, and Brazil added five. AutoZone now operates 7,856 stores across its worldwide network.

For the complete fiscal year, management projects opening between 355 and 365 new stores.

Inventory levels increased 10.8% year-over-year to $7.56 billion, reflecting expansion strategies and inflationary pressures.

During the quarter, AutoZone allocated $586.3 million toward share repurchases, acquiring 164,000 shares at an average cost of $3,582 per share. At quarter’s end, the company maintained $804.2 million available under its existing buyback authorization.

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