AZO · Q3 2026 Earnings

Bullish

AutoZone

Reported May 26, 2026

30-second summary

30-second take: Q3 revenue rose 8.4% YoY to $4.84B and GAAP diluted EPS came in at $38.07 (vs. $35.36 prior-year), with domestic SSS rebuilding to +4.1% from Q2's +3.4% [Q2 brief] and domestic commercial reaccelerating to +10.4% from +9.8% [Q2 brief]. Total company SSS (cc) rebuilt to +3.9% from Q2's +3.3% [Q2 brief] — a partial validation of management's "Q2 was weather, not demand" framing from last quarter, though international cc comps decelerated again to +1.6%, making the bullish international narrative the most stretched piece of the story. Management also quietly raised the FY26 store-opening guide to 355–365 (from 350–360), signaling confidence in the back-half build cadence despite a Q3 opening shortfall.

Headline numbers

EPS

Q3 FY2026

$38.07

+5.2% vs est.

Revenue

Q3 FY2026

$4.84B

+8.4% YoY

-0.4% vs est.

Gross margin

Q3 FY2026

52.2%

Free cash flow

Q3 FY2026

$0.46B

Operating margin

Q3 FY2026

19.1%

Key financials

Q3 FY2026

Metric	Q3 FY2026	Q3 FY2025	YoY	Q2 FY2026	QoQ
Revenue	$4.84B	$4.46B	+8.4%	$4.27B	+13.3%
EPS	$38.07	$35.36	+7.7%	$27.63	+37.8%
Gross margin	52.2%	52.7%	-50bps	52.5%	-30bps
Operating margin	19.1%	19.4%	-30bps	16.3%	+276bps
Free cash flow	$0.46B	$0.42B	+7.7%	$0.01B	+2937.3%

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	Q3 FY2026	90 to 95 stores globally	82 stores	-8 to -13 below guide	Beat
Interest expense	Q3 FY2026	$112 million	Not disclosed	in-line (not reported)	Met
Tax rate	Q3 FY2026	approximately 22.9%	Not disclosed	in-line (not reported)	Met
LIFO charge	Q3 FY2026	approximately $60 million	Not disclosed	in-line (not reported)	Met
Foreign exchange benefit to revenue	Q3 FY2026	approximately $75 million	Not disclosed	in-line (not reported)	Met
Foreign exchange benefit to EBIT	Q3 FY2026	$20 million	Not disclosed	in-line (not reported)	Met
Foreign exchange benefit to EPS	Q3 FY2026	$0.85 per share	Not disclosed	in-line (not reported)	Met

New guidance

Metric	Period	Guide	YoY
Store openings	Q2 FY2026	65 to 70 stores globally	+44-56% YoY
Interest expense	Q2 FY2026	$114 million range	+4.6% YoY

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
LIFO charge	FY2026	approximately $277 million	approximately $240 million (implied: $60M × 4 quarters)	-$37 million	Lowered

Reaffirmed unchanged this quarter: Store openings (350 to 360 stores), Capital expenditure (nearly $1.6 billion), Mega Hub openings (at least 30 Mega Hub locations)

Segment performance

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Domestic Commercial Sales	$1.403B	—	+10.4%

Platform metrics

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Total Company Same Store Sales (Constant Currency)	3.9%	5.4%	—
Domestic Same Store Sales	4.1%	5.0%	—
International Same Store Sales (Constant Currency)	1.6%	8.1%	—
Total Stores Opened (Net)	82	—	—
Total Store Count	7,856	—	—
Sales per Average Store (Trailing 4Q)	$2,600 thousand	—	—

Profitability

Q3 FY2026

Segment	Q3 FY2026	Q3 FY2025	YoY
Operating Margin	19.1%	—	—

Other KPIs

Q3 FY2026

Segment	Q3 FY2026
Share Repurchases (Quarter)	$586.3 million

Management tone

Narrative arc: Q4 FY25 "deploy capital behind the conviction" → Q1 FY26 "raise the conviction further" → Q2 FY26 "hold the conviction through the weather" → Q3 FY26 "weather thesis partially validated."

Note: this brief is sourced from the Q3 FY26 press release only; the Q3 FY26 transcript was not available. Tone commentary is therefore confined to what is directly observable in the press-release language and the YoY/sequential numerical signals.

The weather-isolation thesis from Q2 was the primary falsifiable claim management made, and the Q3 print partially vindicates it. Domestic SSS rebuilt from +3.4% [Q2 brief] to +4.1%, commercial reaccelerated from +9.8% [Q2 brief] to +10.4%, and total company SSS (cc) rebuilt from +3.3% [Q2 brief] to +3.9%. Management's Q2 framing — "first 10 weeks of Q2 at +12% commercial, last 2 weeks at +1% due to weather; expected to return to Q1-like performance" — proved directionally correct but the recovery was incomplete: Q3 did not fully return to Q1 levels, suggesting some of the Q2 deceleration was cyclical/comparison-driven rather than purely weather-driven.

The international "bullish" narrative is now visibly under pressure. International cc comps printed +1.6% in Q3, well below the prior-year Q3 +8.1% and below Q1 FY26's +3.7% [Q1 transcript]. The press release CEO quote acknowledges that "international performance has been below our plan" while maintaining the share-gain claim — a measurable softening from the prior "bullish" framing, though stopping short of a full walk-back.

Management raised the FY26 store-opening guide despite a Q3 shortfall. Q3 came in at 82 vs. 90–95 guide (8 below low end / 13 below high end), yet the press release raised the FY26 range to 355–365 (from 350–360). This implies management expects a meaningful Q4 acceleration in openings; YTD of 199 leaves ~156–166 stores to open in Q4 to hit the new range, a sharp ramp versus the Q3 cadence but consistent with the prior quarter's "back-half weighted" framing.

Recurring themes management leaned on this quarter:

Commercial business acceleration and share gains as primary growth leverAggressive store expansion pace (350-360 stores FY26, 500/year target by 2028)Mega Hub and distribution network deployment driving sales liftInternational market share gains despite macro headwinds in MexicoStrategic SG&A investment supporting near-term growth opportunitiesAging car park and weak new vehicle sales as structural DIY tailwind

Risks management surfaced:

Macro slowdown in Mexico impacting international growth trajectoryWeather comparisons and regional variability (hurricane comp laps, seasonal fluctuations)Tariff-driven cost inflation affecting LIFO layers and margin structureExecution risk on accelerated store opening pace and supply chain optimizationFX volatility impacting reported results and Q2 guidance dependency on spot rates

Q&A highlights

Brett Jordan · Jeffries

What is the maturation schedule for new stores and the incremental investment required? Will domestic growth require more distribution centers or accelerated hub expansion?

New stores mature over 4-5 years on a predictable basis. ~2 points of SG&A growth related to new stores and commercial acceleration through FY28 when 500 stores globally are expected. Supply Chain 2030 investments mostly complete in U.S.; Mexico expansion finishing in March/April; Brazil bringing third-party distribution in-house. Management detailed specific DC timelines and efficiency improvements.

4-5 year store maturation timeframe2 points of SG&A growth associated with store ramp500 stores globally expected by FY28300 mega hubs targeted with 100 in pipeline

Bharath Rao · J.P. Morgan

How much of DIY's sequential slowdown was attributable to weather versus government shutdown noise or deterioration in underlying demand?

Management attributed the slowdown primarily to weather comparisons in the middle four-week segment (northern market cold snap vs. prior year hurricane benefit), not customer demand deterioration. Weather was a 'wobble' not indicative of weakening trends.

Middle four-week segment down significantly vs. first and third segmentsWeather-driven, not demand-driven slowdownPrior year benefited from hurricane and cold snap not repeatingNo observable deterioration in underlying customer demand

Skyler Tennant · Morgan Stanley

Is the consumer showing elasticity to higher prices or trade-downs? How has inflation impacted the product catalog and demand elasticity?

Lower-end consumer has been under pressure >2 years but remains stable with no significant wobbles. Higher-end consumer also stable. Limited trade-down opportunity given most inventory is one-part-fits-one-vehicle. Inflation expected to continue through Q3, then moderate in Q4. Most products are break-fix/required maintenance with limited elasticity; pure discretionary items (16-17% of market) had significant declines over 2 years but stabilized and slightly improved this year.

Lower-end consumer under pressure >2 years but relatively stableMinimal trade-down observedInflation expected to rise through Q3, moderate in Q4Discretionary items represent 16-17% of addressable market

Zayn Grokhan · UBS

How sustainable is same-source sales momentum as comparisons become tougher in Q3/Q4 and higher inflation is lapped? What is the relationship between SG&A growth outpacing sales growth, and does achieving 19%+ operating margins depend on gross margin recovery?

Management expects comp growth to remain relatively stable but may moderate slightly in latter Q3/Q4. Confident in market share gains. SG&A will slightly outpace sales as stores ramp, then align with sales as stores mature. Operating margin target of 20% (not 19%+) achievable through current model: remove 2 points from store investment plus 140 bps LIFO drag equals 3.5 points upside, returning 17%+ gap basis back to 20% operating model on larger store base.

Comps expected relatively stable, may flatten slightlyConfident in continued market share growthSG&A will slightly outpace sales during store ramp, then align140 basis points LIFO headwind in model

Shervin · Truist

Were lower LIFO charges this quarter due to tariff reductions or mitigation efforts? Will this impact inflation/same-skew expectations?

LIFO beat expectations due to two factors: (1) vendor negotiation, source diversification, and retail price increases executed successfully; (2) IEPA tariff rollback from 20% to 10% announced in November. Merchants have refined tariff mitigation and sourcing diversification strategies since 2016-2017. Still expecting some higher tariff costs ahead but less than originally anticipated. Supply chain efficiency gains also supporting gross margins.

Lower LIFO impact than originally anticipatedIEPA tariffs reduced from 20% to 10%Playbook: vendor negotiation, source diversification, retail increasesMerchants have 6+ years experience in tariff mitigation

Answers to last quarter's watch list

Whether Q3 domestic SSS recovers toward Q1 +4.8% or stalls near Q2 +3.4% — Domestic SSS came in at +4.1%, a meaningful rebuild from Q2 but not a full return to Q1 levels. Management's "return to Q1-like performance" framing is partially validated — the weather thesis explains most of the Q2 air-pocket, but not all of it.

Resolved positively

Whether commercial growth re-accelerates to low-teens or whether 9.8% Q2 proves cycle-related — Commercial reaccelerated to +10.4%, returning to double digits and confirming the Q2 decel was substantially weather-driven, but well below Q1's +14.5% peak [Q1 transcript]. The "first 10 weeks at +12%" framing is partially vindicated; the +14.5% cyclical peak does not appear to be reclaimable in the near term.

Resolved positively

Whether international cc comps inflect upward or print a further deceleration — International cc printed +1.6%, a further decel from Q1 FY26's +3.7% [Q1 transcript] and well below the prior-year Q3 +8.1%. The international narrative is now the weakest link in the bull case.

Resolved negatively

Whether Q3 net new stores hit the 90–95 guide — Q3 delivered 82 net new stores, missing the low end by 8 and the high end by 13. However, management raised the FY26 guide to 355–365 (from 350–360), implying confidence in a sharp Q4 ramp. Status: Mixed — Q3 missed, but FY guide raised.

Whether the FY26 LIFO charge holds at ~$277M or drifts higher — No forward LIFO guidance was disclosed in the Q3 press release, and no Q3 transcript is available to confirm any update. Q3 gross margin was pressured 77bps by net non-cash LIFO impact, consistent with continued tariff-driven cost pressure. Status: Cannot confirm — no transcript available.

Whether DIY traffic bends back from -3.6% toward zero — DIY-specific traffic was not disclosed in the press release; domestic SSS of +4.1% (combined DIY and commercial) suggests traffic remained negative with ticket carrying the comp, but without segment-specific traffic disclosure this cannot be confirmed.

Continue monitoring

What to watch into next quarter

Whether international cc comps inflect upward in Q4 or print a further decel below +1.6% — at this trajectory, the "bullish" framing becomes operationally untenable regardless of language

Whether the raised FY26 store-build guide of 355–365 is delivered, requiring ~156–166 net openings in Q4 alone versus 82 in Q3 — a sharp ramp that will test the back-half-weighted build cadence narrative

Whether commercial sustains at the +10.4% Q3 level or whether it normalizes back toward high single digits as the prior-year FY25 acceleration laps make comparisons stiffer

Whether forward LIFO guidance is re-disclosed on the Q4 call and whether the tariff-driven cost pressure abates or reasserts

Whether Q4 domestic SSS holds at or above the Q3 +4.1% level as the weather comp from Q2 unwinds and tax-refund tailwinds management cited last quarter materialize or fail to

Whether management discloses DIY-specific traffic in the Q4 call given multi-quarter share-gain narrative dependence on traffic stabilization

Sources

AutoZone Q3 FY2026 press release, filed with SEC, 2026-05-26 — https://www.sec.gov/Archives/edgar/data/866787/000117184326003674/exh_991.htm
AutoZone Q2 FY2026 brief (Tapebrief, 2026-03-03) — for prior-quarter SSS, commercial growth, and guidance trajectory
AutoZone Q1 FY2026 brief (Tapebrief, 2025-12-09) / Q1 FY26 transcript — for Q1 SSS, commercial growth, and international cc
AutoZone Q4 FY2025 brief (Tapebrief, 2025-09-23) — for narrative arc

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