AutoZone, Inc. (NYSE:AZO) stock fell Tuesday despite the company reporting stronger third-quarter revenue growth and continued expansion across its commercial and international businesses.
AutoZone Posts Strong Revenue Growth Despite Stock Decline
The automotive-parts retailer, which serves both do-it-yourself customers and professional mechanics through its stores and online platforms, reported third-quarter earnings of $38.07 per share, beating analyst estimates of $36.10. Revenue increased 8.4% year over year to $4.84 billion, ahead of Wall Street expectations of $4.83 billion.
Comparable Sales Rise Amid Margin Pressure
AutoZone said total same-store sales increased 5.5% during the quarter. Domestic same-store sales rose 4.1%, while international same-store sales climbed 16.6%. On a constant-currency basis, international same-store sales increased 1.6%.
Gross margin declined 57 basis points year over year to 52.2%, reflecting a 77-basis-point net non-cash LIFO impact.
Inventory increased 10.8% from a year earlier, driven mainly by inflation and growth initiatives.
Operating profit rose 6.6% to $923.8 million, while net income increased to $641.5 million from $608.4 million a year earlier.
Store Expansion Supports International Growth
During the quarter ended May 9, 2026, AutoZone opened 57 stores in the U.S., 20 in Mexico and five in Brazil, for a total of 82 net new stores.
The company repurchased 164,000 shares during the quarter at an average price of $3,582 per share, totaling $586.3 million. AutoZone had $800 million remaining under its current buyback authorization at quarter’s end.
Cash and cash equivalents totaled $253.73 million at the end of the quarter. Operating cash flow increased to $847.39 million from $769.03 million a year earlier.
Commercial Business Continues To Gain Momentum
CEO Phil Daniele said AutoZone delivered its strongest sales growth since fiscal 2023, supported by market-share gains, commercial demand and new store openings.
Daniele said the company plans to open about 365 stores globally this year, compared with 305 last year, while continuing to expand its hub and megahub network to improve inventory availability and delivery speeds.
Domestic commercial sales rose 10.4% during the quarter, which Daniele said reflected gains with both national-account and local commercial customers.
Daniele also pointed to long-term demand drivers, including an aging vehicle fleet and a difficult new- and used-car market that continues to encourage consumers to repair existing vehicles.
AutoZone Plans Heavy Investment In Stores And Technology
CFO Jamere Jackson said AutoZone expects to invest roughly $1.6 billion in capital expenditures this year and next year, mainly toward stores, hubs, megahubs and technology upgrades.
Jackson added that the company sees significant long-term opportunity in the underpenetrated commercial auto-parts market, while its megahub strategy continues to outperform internal expectations.
During the earnings call, Jackson described the auto-parts business as “pretty inelastic” because many repairs are unavoidable. He added that while consumers may delay maintenance temporarily, deferred repairs often lead to larger and more expensive failures later, helping support long-term demand stability.
Management remained optimistic about future growth, citing expected market share gains and resilient demand despite inflationary pressures, a softer macroeconomic environment, and weather-related sales weakness caused by unseasonably cool temperatures.
AZO Stock Reaction
AZO Price Action: AutoZone shares were down 10.75% at $3040.47 at the time of publication on Tuesday. The stock is trading at a new 52-week low, according to Benzinga Pro data.
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