01—Abstract
Summary
Summary of the 10-Q filed June 13, 2025. Cited figures are marked; the original filing is the authoritative source.
AutoZone, Inc. (AZO) reported its fiscal third-quarter results for the period ending May 10, 2025.
While net sales saw a modest increase of 5.4% to $4.5 billiona, driven by a 5.4% same-store sales growth on a constant currency basis and contributions from new stores, the company experienced a decline in profitability. Operating profit decreased by 3.8% to $866.2 million, net income fell by 6.6% to $608.4 million, and diluted earnings per share (EPS) declined by 3.6% to $35.36.
These results were impacted by unfavorable foreign currency exchange rates, higher inventory shrink, increased commercial sales mix, and new distribution center startup costs. Despite these headwinds, AutoZone continues to invest in growth initiatives, including new store openings, and maintains a strong focus on capital allocation through share repurchases.
02—Key points
Key Highlights
- Net sales increased by 5.4% to $4.5 billion for the third quarter, driven by a 5.4% same-store sales growth (constant currency).
- Operating profit decreased by 3.8% to $866.2 million, and net income declined by 6.6% to $608.4 million.
- Diluted Earnings Per Share (EPS) decreased by 3.6% to $35.36 compared to the prior year period.
- Gross margin declined to 52.7% from 53.5%, attributed to higher inventory shrink, increased commercial mix, and distribution center startup costs.
- Operating expenses as a percentage of sales increased to 33.3% from 32.2%, due to higher self-insurance costs and growth investments.
- The company opened 163 net new stores year-to-date, contributing to a 3.3% increase in total sales to $12.7 billion for the first thirty-six weeks of the fiscal year.
- AutoZone continues to prioritize shareholder returns, with $1.1 billion remaining under its authorized share repurchase program as of May 10, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, AutoZone Inc kept $0.14.
- Revenue$4.46B100.0%
- Cost of revenue−$2.11B47.3%
- Gross profit$2.35B52.7%
- Operating costs−$1.49B33.3%
- Operating income$866.2M19.4%
- Interest, other & tax−$257.7M5.8%
- Net income$608.4M13.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed June 13, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $4.46B$4.24B | +5.4% |
| Cost of Revenue | $2.11B$1.97B | +7.2% |
| Gross Profit | $2.35B$2.27B | +3.9% |
| SG&A Expenses | $1.49B$1.37B | +8.9% |
| Operating Income | $866.17M$900.18M | −3.8% |
| Net Income | $608.44M$651.73M | −6.6% |
| EPS (Basic) | $36.33$37.73 | −3.7% |
| EPS (Diluted) | $35.36$36.69 | −3.6% |
| Shares Outstanding (Basic) | 16.75M17.27M | −3.1% |
| Shares Outstanding (Diluted) | 17.21M17.76M | −3.1% |
05—Questions
Frequently Asked Questions
What drove the decrease in profitability despite sales growth?
The decrease in profitability was primarily driven by several factors including unfavorable foreign currency exchange rates, which had a $89.3 million impact on net sales and $27.1 million on operating profit. Additionally, higher inventory shrink, an increase in the commercial sales mix, and startup costs for new distribution centers negatively impacted gross margins. Operating expenses also rose as a percentage of sales due to increased self-insurance expenses and investments in growth initiatives.
How is AutoZone managing its debt and liquidity?
AutoZone maintains a strong liquidity position with $268.6 million in cash and cash equivalents and $2.2 billion in undrawn capacity on its Revolving Credit Agreement as of May 10, 2025. The company also actively manages its debt, recently repaying $900 million in senior notes and issuing $500 million in new senior notes. They aim to maintain investment-grade credit ratings with a target adjusted debt to EBITDAR ratio of 2.5:1, which was met as of the reporting period.
What is the outlook for new store openings and capital expenditures?
AutoZone continues to invest in its growth strategy, opening 163 net new stores year-to-date. Capital expenditures for the first thirty-six weeks of the fiscal year were $885.6 million, an increase from the prior year, primarily due to investments in new stores and the expansion of hub and mega hub store projects. The company expects to increase its investment in the business in fiscal 2025 compared to fiscal 2024.
Are there any significant changes in AutoZone's risk factors or legal proceedings?
According to the filing, there have been no material changes to the risk factors disclosed in the previous annual report. Similarly, there have been no additional material legal proceedings or material developments in existing legal proceedings since the last annual report.
06—Continue