AZO · Q2 2026 Earnings

Cautious

AutoZone

Reported March 3, 2026

30-second summary

30-second take: Revenue grew 8.1% YoY to $4.27B in Q2 with domestic SSS at +3.4% and total company SSS (cc) at +3.3% — a meaningful decel from Q1's +4.8% and +5.5%, with management attributing 1–1.5 points of comp drag to severe weather in the final two weeks (the first 10 weeks ran +12% commercial vs. +1% in the last two). The harder signal is that FY26 LIFO is now guided to ~$277M (vs. ~$240M implied last quarter from the $98M Q1 actual + $60M × 3 framework), driven by a $59M Q2 LIFO charge disclosed in the print plus ~$60M per quarter for Q3 and Q4. International constant-currency comps also decelerated for a second straight quarter to +2.5% (from +3.7% in Q1 and +7.2% in Q4 FY25) — the bullish-on-international narrative has now held through two decelerating prints, and the share-gain story has gotten more expensive to fund.

Headline numbers

EPS

Q2 FY2026

$27.63

Revenue

Q2 FY2026

$4.27B

+8.1% YoY

Gross margin

Q2 FY2026

52.5%

Free cash flow

Q2 FY2026

$0.01B

Operating margin

Q2 FY2026

16.3%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$4.27B	+8.1%	$4.63B	-7.7%
EPS	$27.63	—	$31.04	-11.0%
Gross margin	52.5%	—	51.0%	+150bps
Operating margin	16.3%	—	16.9%	-56bps
Free cash flow	$0.01B	—	$0.63B	-97.6%

Guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Store openings	Q2 FY2026	65 to 70 stores globally	64 net new stores opened	slightly below guide (low end of range)	Beat

New guidance

Metric	Period	Guide	YoY
LIFO charges	FY 2026	approximately $277 million	—
Store openings	Q3 FY2026	90 to 95 stores globally	+7-13% YoY
Interest expense	Q3 FY2026	$112 million	+0.9% YoY
Tax rate	Q3 FY2026	approximately 22.9%	—
LIFO charge	Q3 FY2026	approximately $60 million	—
LIFO impact on EPS	Q3 FY2026	approximately $2.75 per share	—
FX benefit to revenue	Q3 FY2026	approximately $75 million	—
FX benefit to EBIT	Q3 FY2026	$20 million	—
FX benefit to EPS	Q3 FY2026	$0.85 per share	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Megahub openings	FY 2026	at least 30 locations	approximately 30 Megahub locations	change from 'at least 30' to 'approximately 30' — slightly narrowed but qualitatively similar	Raised

Reaffirmed unchanged this quarter: Store openings (350 to 360 stores), CapEx investment (nearly $1.6 billion)

Segment performance

Q2 FY2026

Segment	Q2 FY2026	YoY
Domestic Commercial	$1.155B	+9.8%

Platform metrics

Q2 FY2026

Segment	Q2 FY2026
Total Company Same Store Sales (Constant Currency)	3.3%
Domestic Same Store Sales	3.4%
International Same Store Sales (Constant Currency)	2.5%
Net New Stores Opened	64
Total Store Count	7,774
Sales per Average Square Foot	$81
Average Sales per Commercial Program per Week	$15.4
Net Inventory per Store	($105) thousand

Management tone

Narrative arc: Q3 FY25 "best days ahead" → Q4 FY25 "deploy capital behind the conviction" → Q1 FY26 "raise the conviction further" → Q2 FY26 "hold the conviction through the weather."

Commercial narrative shifted from "structural share-gain machine" to "structural share-gain machine, weather-adjusted." Q1 management dropped historical caveats on commercial and treated 14.5% as the new run-rate. This quarter at 9.8%, management leaned heavily on weather isolation rather than acknowledging deceleration as cycle-related: "First 10 weeks of Q2 were up 12% range, last two weeks dropped to 1% comp due to severe weather affecting wide geographic area from Dallas to DC." The framing is internally consistent — the 12% first-10-weeks figure would have extended the Q1 trajectory — but it places the entire share-gain thesis on the credibility of the weather attribution. Q3 will be the cleanest test.

International posture held "bullish" through a second decelerating quarter, but the conviction is now being stress-tested. Q1 the international decel to +3.7% cc was framed as Mexico macro noise. This quarter at +2.5% cc the language stayed elevated: "we are bullish on international being an attractive and meaningful contributor to AutoZone's future sales and operating profit growth." But management paired it for the first time with explicit caution: "the Mexico consumer remains under pressure." Two consecutive decelerating quarters with the same bullish framing is now the most stretched piece of the narrative — either international reaccelerates in H2 or the language gets walked back. The FX backdrop helped this quarter: Q2 FX delivered $74M of revenue benefit, $23M of EBIT, and $0.95 of EPS — meaningfully above the prior Q2 FX guide of $57M / $18M / $0.77 — which is the source of much of the reported international revenue strength masking the cc deceleration.

Tariff/LIFO narrative quietly reset upward again. Q4 FY25 introduced the LIFO headwind framework ($120M Q1 + $80–85M × Q2–Q4 = ~$360–375M). Q1 walked it down to $98M Q1 + $60M × Q2–Q4 = ~$240M, citing IEPA tariff rollback and vendor mitigation. This quarter management directly disclosed the FY26 LIFO load at ~$277M vs. $64M last year, with $59M in Q2 and another ~$60M each in Q3 and Q4. The pattern is now: each quarter management gives a smoother forward LIFO path; each quarter the cumulative reality drifts higher. Q&A confirmed same-skew inflation runs through "most of Q4 calendar."

Weather framing moved from "Q2 headwind" to "Q2 headwind that becomes summer tailwind." This is the rhetorically most aggressive shift of the quarter. Rather than treating weather as a clean one-time drag, management explicitly reframed it as a forward tailwind: "Historically, these types of winter weather patterns have had a positive impact on our summer selling seasons... extreme weather events drive failure and maintenance events." Combined with the tax-refund-tailwind framing, management is asking investors to discount the Q2 print as temporary and expect H2 to benefit from the same conditions that caused it. Falsifiable in Q3 and Q4.

SG&A discipline language sharpened. Q1 framing was "purposefully overinvesting." This quarter management committed to SG&A growth moderating in H2 as the prior-year store-opening acceleration laps: "SG&A growth will moderate in back half due to lapping accelerated prior-year store openings; won't return to double-digit growth rates." The 18–19% operating margin range stated in Q&A is the cleanest articulation of the medium-term margin floor management has provided.

Recurring themes management leaned on this quarter:

Market share gains acceleration in both DIY and commercial segmentsInventory and distribution network optimization driving sales lift and customer serviceInternational expansion as material growth pillar (14% of store base, targeting higher)Weather volatility creating positive tailwinds for summer demandLIFO charges from tariff-driven cost inflation as near-term headwindCapital deployment discipline with proven ROI on new store models

Risks management surfaced:

Mexico macro environment remains under pressure with slower economic growthLIFO charges expected to persist ($60M per remaining quarter vs $64M full year prior)Tariff impact on weighted average costs continuing forwardTraffic decline (-3.6% DIY) from tough weather comparisonsForeign exchange volatility (though currently a tailwind, noted as translation risk)

Q&A highlights

Brett Jordan · Jefferies

Same-skew inflation expectations for remainder of fiscal year and calendar year; tariff impacts; tax refund timing and weather effects on seasonal categories like undercar and chassis

Same-skew inflation expected to continue increasing through Q3 and most of Q4, then tail off in calendar Q4. Two 32 tariffs are primary exposure (IEPA tariffs stayed). Multi-pronged strategy includes vendor negotiation, source diversification, and retail price increases. Winter weather in Rust Belt markets historically correlates with strong spring/summer performance in undercar and rust/salt-related maintenance categories. Tax season just beginning but expected to produce slightly larger refunds.

Same-skew inflation to continue through Q3 and most of Q4 in single digitsTwo 32 tariffs are primary tariff exposureTariff costs not yet fully passed through systemTax refunds expected to be slightly larger based on no tax on tips policy

Chris Hovers · JP Morgan

Underlying run rate of domestic business excluding weather noise; commercial side deceleration below 10% on DIFM basis; expected sequential growth acceleration from weather and tariff benefits

First 10 weeks of Q2 were up 12% range, last two weeks dropped to 1% comp due to severe weather affecting wide geographic area from Dallas to DC. Management sees nothing indicating strong commercial sales won't resume. Expected to perform similarly to Q1 (strong) excluding severe weather impacts. Winter weather benefits and tax refunds expected to drive positive momentum; normal to hot summer anticipated.

First 10 weeks of Q2: +12% compLast 2 weeks of Q2: +1% compWeather impact geographic span: Dallas to DCSchools in Tennessee and Arkansas closed for 2 weeks due to severe weather

Simeon Gutman · Morgan Stanley

Can margins expand or should focus be on EBIT dollar growth; discussion of managing margin rates on DIY and commercial sides; operating margin range expectations

Both DIY and commercial can see incremental gross margin improvement, but commercial will grow faster than DIY creating margin mix pressure. Company will operate in 18-19% operating margin range historically. Gross margins managed with intensity; Q2 had 27 bps of rate pressure from commercial mix offset by merchant and supply chain efforts. Faster-growing EBIT business expected from store maturation and SG&A moderation despite mix headwinds.

Target operating margin range: 18-19%Q2 commercial mix created 27 basis points of gross margin rate pressureCommercial growing faster than DIYSG&A expected to moderate from current investment levels

Michael Lasser · UBS

Did commercial weather slowdown indicate potential supplier call list positioning concerns; did company pull back on operating expenses anticipating slowdown; will operating expense growth revert to double-digit rates if comps improve

Weather impact was end-of-quarter timing only with shops literally closed; no indication of call list issues. Company continues gaining share through hub/mega hub strategy, satellite assortment improvement, and ease of doing business initiatives. No unusual operating expense management in Q2 beyond normal payroll discipline tied to transaction levels. SG&A growth will moderate in back half due to lapping accelerated prior-year store openings; won't return to double-digit growth rates. Investment cadence unchanged.

400 rolling store closures from weatherCommercial accounts stayed closed 2+ weeksEarly Q3 showing snap-back to normalSG&A growth moderating from double-digit rates

Zach Fadum · Wells Fargo

Weather impact quantification on Q2 comp; DIY traffic deferred maintenance assessment and recovery timeline; SG&A spending peak and moderation timeline; store investment payback periods and EBIT growth timing

Weather impact estimated at 1-1.5 points to comp at Q2 end. DIY traffic down 3.5% similar to Q1; deferred maintenance expected to accelerate in H2 with tax refunds and larger failure projects. SG&A spending peaking and moderating from here. Stores modeled conservatively with 4-5 year maturation timeline; mega hubs performing better than modeled. Expecting to see stores mature with top line/EBIT acceleration in FY27 and FY28. Healthy returns on invested capital expected.

Weather impact: 1-1.5 comp points at Q2 endDIY traffic down 3.5% in both Q1 and Q2Store maturation timeline: 4-5 yearsMega hubs performing better than model

Answers to last quarter's watch list

Whether Q2 net store openings hit the 65–70 global guide — Resolved negatively in absolute terms, immaterially. Q2 delivered 64 net new stores versus the 65–70 guide, missing the low end by 1. Through H1, cumulative openings of 117 still trail the ~178/half pace required for the 350–360 FY midpoint; the Q3 guide of 90–95 implies a hard back-half ramp. The FY guide was reaffirmed at 350–360, but execution risk against it has not improved.

Resolved negatively

Whether commercial growth holds in the low-teens range or whether 14.5% marks the cyclical peak — Resolved negatively. Domestic commercial grew 9.8% in Q2 vs. 14.5% in Q1, the first deceleration in five quarters. Management's defense is that the first 10 weeks ran +12% commercial and the final two weeks were a weather-driven anomaly — credible but unverifiable until Q3. The headline decel is real.

Resolved negatively

Whether international constant-currency comps recover from +3.7% or whether Mexico macro weakness persists — Resolved negatively. International cc comps decelerated for the second straight quarter to +2.5% (from +3.7% Q1 and +7.2% Q4 FY25). Management held the "bullish" language but for the first time explicitly flagged Mexico consumer pressure. The international narrative is now two quarters deep into a decel with no inflection visible.

Resolved negatively

Whether the ~$60M/quarter LIFO run-rate holds for Q3 and Q4 as guided — Resolved negatively on cumulative magnitude. Q2 LIFO came in at $59M (in line with the ~$60M guide), and the Q3 LIFO guide of ~$60M holds the per-quarter pace, but the FY26 total is now ~$277M vs. the ~$240M implied last quarter. The "tariff inflation moderating in Q4" framing from Q1 is no longer operative — LIFO holds at the elevated run-rate through year-end.

Resolved negatively

Whether DIY traffic stabilized above the -1.9% Q4 pace — Resolved negatively. Management disclosed DIY traffic count down 3.6% in Q2 (similar to Q1). Traffic has not bent back; ticket strength continues to mask the trend, and management's share-gain narrative now sits on top of a multi-quarter traffic decline materially deeper than the Q4 FY25 -1.9% level.

Resolved negatively

Whether management discloses Mega-Hub-specific comp productivity — Not resolved. Mega-Hub-specific comp productivity was again not disclosed; management characterized mega hubs as "performing better than modeled" in Q&A but provided no quantification. Third consecutive quarter where the question was effectively deflected.

Continue monitoring

What to watch into next quarter

Whether Q3 domestic SSS recovers toward the Q1 +4.8% level or stalls near Q2's +3.4% — Q3 is the cleanest test of the weather-isolation thesis; management explicitly said "expected to return to Q1-like performance levels," making this falsifiable

Whether commercial growth re-accelerates to low-teens or whether the 9.8% Q2 print proves to be cycle-related rather than weather-related — the "first 10 weeks at +12%" framing requires Q3 to validate

Whether international cc comps inflect upward or print a third consecutive deceleration — a Q3 below +2.5% would force management to walk back the "bullish" language that has now held through two decel quarters

Whether Q3 net new stores hit the 90–95 guide — cumulative H1 of 117 stores requires ~243 in H2 (~120/quarter average) to reach the 355 FY midpoint; a Q3 miss would mechanically threaten FY guide credibility

Whether the FY26 LIFO charge holds at ~$277M or drifts higher in Q3 — the pattern of upward LIFO revisions despite forward-smooth guidance is now two quarters old

Whether DIY traffic bends back from -3.6% toward zero as tax refunds arrive and weather normalizes — the share-gain narrative has now sat on top of multi-quarter traffic declines materially worse than the prior watch threshold

Sources

AutoZone Q2 FY2026 press release, filed with SEC, 2026-03-03 — https://www.sec.gov/Archives/edgar/data/866787/000117184326001288/exh_991.htm
AutoZone Q2 FY2026 earnings call prepared remarks and Q&A (transcript excerpts as provided)
AutoZone Q1 FY2026 brief (Tapebrief, 2025-12-09) — for guidance and tone comparison
AutoZone Q4 FY2025 brief (Tapebrief, 2025-09-23) — for narrative arc
AutoZone Q3 FY2025 brief (Tapebrief, 2025-05-27) — for narrative arc

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