01—Abstract
Summary
Summary of the 10-K filed October 27, 2025. Cited figures are marked; the original filing is the authoritative source.
AutoZone (AZO) closed fiscal 2025 (52 weeks ended August 30, 2025) with net sales of $18.9 billiona, up 2.4% from $18.5 billion in fiscal 2024, which included a 53rd week.
Domestic same-store sales rose 3.2% and domestic commercial sales grew 6.7%, but profitability declined: operating profit fell 4.7% to $3.6 billionb, net income dropped 6.2% to $2.5 billion, and diluted EPS decreased 3.1% to $144.87. Gross margin contracted 47 basis points to 52.6% largely due to a $64.0 million non-cash LIFO charge (versus a $40.0 million benefit a year earlier), and SG&A rose to 33.6% of sales from 32.6% as the company invested in growth initiatives. International same-store sales were negative in reported dollars (-3.2%), though up 9.3% in constant currency.
The company continues to expand aggressively, opening a net 304 stores to reach 7,657 locations across the U.S., Mexico and Brazil, and capital expenditures rose to $1.3 billionc. Management expects a moderate increase in investment in fiscal 2026. Share repurchases were reduced to $1.5 billion from $3.2 billion in the prior year, and the Board added $1.5 billion to the buyback authorization in October 2025, bringing total capacity to roughly $1.9 billion remaining.
Total debt was $8.8 billiond, the company maintains investment-grade ratings, and its stockholders' deficit narrowed to $3.4 billion, a structural feature of its aggressive buyback history rather than a sign of distress. Key risks flagged in the filing include tariff-driven product cost inflation, which is already affecting LIFO and pricing; dependence on an aging vehicle fleet and miles driven for demand; intensifying competition from online and omnichannel retailers; labor cost pressure and potential unionization; cybersecurity exposure, including past data exfiltration incidents; and self-insurance reserve estimates, which the auditor identified as a critical audit matter.
02—Key points
Key Highlights
- Revenue grew 2.4% to $18.9 billion, driven by 3.2% domestic same-store sales growth and a 6.7% increase in domestic commercial sales, which now represent 31.7% of domestic sales.
- Operating profit fell 4.7% to $3.6 billion and diluted EPS declined 3.1% to $144.87, reflecting gross margin compression of 47 bps (including a $64 million LIFO charge) and higher SG&A from growth investments.
- Store footprint expanded by a net 304 locations to 7,657 total stores, with 305 new openings, and 133 mega hub stores in the U.S. (up 24 year over year).
- Capital expenditures increased to $1.3 billion, and management plans a moderate further increase in investment for fiscal 2026 focused on new stores and hub expansions.
- Share repurchases dropped to $1.5 billion from $3.2 billion, and the Board authorized an additional $1.5 billion in October 2025, leaving about $1.9 billion available.
- Debt totaled $8.8 billion with a 2.5x adjusted debt-to-EBITDAR ratio and a 5.1x interest coverage ratio, and the company maintains investment-grade credit ratings.
- Tariffs are a significant emerging risk, contributing to higher product costs, LIFO reserve build of $83 million, and ongoing uncertainty for supplier pricing and inventory availability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2025, AutoZone Inc kept $0.13.
- Revenue$18.94B100.0%
- Cost of revenue−$8.97B47.4%
- Gross profit$9.97B52.6%
- Operating costs−$6.36B33.6%
- Operating income$3.61B19.1%
- Interest, other & tax−$1.11B5.9%
- Net income$2.50B13.2%
Where FY2025 revenue went
$18.94B- Cost of revenue: $8.97B, 47% of revenue
- SG&A: $6.36B, 34% of revenue
- Net income: $2.50B, 13% of revenue
- Interest, other & tax: $1.11B, 5.9% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2025filed October 27, 2025Financial Statements
FY2025 against FY2024
| Line item | FY2025FY2024 | Change |
|---|---|---|
| Revenue | $18.94B$18.49B | +2.4% |
| Cost of Revenue | $8.97B$8.67B | +3.4% |
| Gross Profit | $9.97B$9.82B | +1.5% |
| SG&A Expenses | $6.36B$6.03B | +5.4% |
| Operating Income | $3.61B$3.79B | −4.7% |
| Net Income | $2.50B$2.66B | −6.2% |
| EPS (Basic) | $148.80$153.82 | −3.3% |
| EPS (Diluted) | $144.87$149.55 | −3.1% |
| Shares Outstanding (Basic) | 16.79M17.31M | −3.0% |
| Shares Outstanding (Diluted) | 17.25M17.80M | −3.1% |
05—Questions
Frequently Asked Questions
Why did AutoZone's earnings decline despite sales growth?
Sales rose 2.4%, but operating profit fell 4.7% and net income fell 6.2%. The main drivers were a 47 basis point gross margin decline, largely from a $64 million non-cash LIFO charge tied to tariff-driven inflation, and SG&A growing faster than sales as the company invested in new stores and growth initiatives. The prior year also benefited from a 53rd week and a $40 million LIFO benefit, which made the comparison harder.
How is AutoZone funding its growth and shareholder returns?
Operating cash flow of $3.1 billion covered most of the $1.3 billion in capital expenditures and $1.6 billion in share repurchases, with the balance funded by net new borrowings of roughly $0.2 billion in commercial paper and $500 million in new senior notes offset by $900 million in repayments. The company also relies heavily on extended supplier payment terms, with accounts payable at 114% of inventory and $5.7 billion in supplier-financed obligations, which is a meaningful dependency investors should monitor.
What is the outlook for fiscal 2026 and what risks should investors watch?
Management expects to moderately increase investment in fiscal 2026, primarily for new stores and expanded hub and mega hub locations, with $207 million of tax credit capital commitments due. Key risks include tariff escalation and its effect on product costs and LIFO charges, supplier financing arrangements that could be curtailed if credit ratings are downgraded, competitive pressure from online retailers, labor cost inflation and potential unionization, and cybersecurity incidents, given past data exfiltration events.
Why does AutoZone have a stockholders' deficit, and is it a concern?
The deficit of $3.4 billion results from years of large share repurchases funded with debt and cash flow, which reduced equity below zero. Because the company generates strong cash flow and maintains investment-grade ratings, the deficit is largely a function of its capital allocation strategy rather than an indication of operating weakness. Still, it means leverage ratios and credit ratings are important to monitor as buybacks continue.
How much of AutoZone's business is commercial versus retail, and is the commercial segment growing?
Domestic commercial sales grew 6.7% in fiscal 2025 and represented 31.7% of total domestic sales. The commercial program operated in 6,098 domestic stores, and growth there outpaced retail, making it an important driver of long-term sales growth as the company competes for professional repair shop and fleet accounts.
06—Continue