01—Abstract
Summary
Summary of the 8-K filed March 4, 2025. Cited figures are marked; the original filing is the authoritative source.
AutoZone reported fiscal Q2 2025 results (12 weeks ended February 15, 2025) with net sales of $4.0 billiona, up 2.4% year over year.
Total company same store sales rose 2.9%b on a constant currency basis (0.5% as reported), driven by 1.9% domestic growth and 9.5% constant currency international growth. Domestic commercial sales grew 7.3%, a key strategic focus, and domestic DIY and commercial sales accelerated from the prior quarter. Profitability came under pressure.
Gross margin was flat at 53.9%, but operating expenses rose to 36.0% of sales from 34.6%, reflecting investments in growth initiatives. Operating profit fell 4.9% to $706.8 millionc, net income declined 5.3% to $487.9 million, and diluted EPS dropped 2.1% to $28.29. Currency movements also weighed on reported international results.
Capital allocation and balance sheet items remained consistent with AutoZone's model. The company repurchased 100 thousand shares for $329.4 milliond at an average price of $3,291, leaving $1.3 billion under its authorization. Inventory grew 10.4% year over year, and net inventory per store was negative $161 thousand, indicating suppliers continue to fund most inventory.
Total debt was $9.05 billion, and adjusted debt to EBITDAR was 2.5x, which the company manages to maintain investment-grade ratings. The company opened 45 net new stores, bringing its total to 7,432.
02—Key points
Key Highlights
- Net sales of $4.0 billion, up 2.4% YoY; total company same store sales up 2.9% constant currency (0.5% reported).
- Domestic same store sales up 1.9%; domestic commercial sales up 7.3%, a standout growth driver.
- International same store sales up 9.5% constant currency, but reported international same store sales fell 8.2% due to FX headwinds.
- Operating expense deleverage to 36.0% of sales (from 34.6%) pushed operating profit down 4.9% to $706.8 million.
- Diluted EPS fell 2.1% to $28.29; net income declined 5.3% to $487.9 million.
- Repurchased $329.4 million of stock in the quarter; $1.3 billion remains on the authorization.
- Opened 45 net new stores (7,432 total), with inventory up 10.4% YoY and net inventory per store still negative.
03—Questions
Frequently Asked Questions
Why did AutoZone's earnings decline despite sales growth?
Sales grew 2.4%, but operating expenses rose to 36.0% of sales from 34.6%, driven by investments supporting growth initiatives. Gross margin held flat at 53.9%, so the expense deleverage reduced operating profit by 4.9% and net income by 5.3%.
How strong is the domestic business versus international?
The domestic business is the core driver, with same store sales up 1.9% and domestic commercial sales up 7.3%. International constant currency same store sales rose 9.5%, but reported results were hurt by currency fluctuations, which pulled reported international same store sales down 8.2%.
Is AutoZone still returning capital to shareholders?
Yes. The company repurchased $329.4 million of stock in the quarter at an average price of about $3,291 per share and has $1.3 billion remaining under its authorization, though this is down from $2.1 billion a year earlier.
Is the balance sheet a concern given the debt and inventory growth?
Total debt is $9.05 billion, and adjusted debt to EBITDAR is 2.5x, slightly up from 2.4x a year earlier. Management targets investment-grade ratings. Inventory rose 10.4%, but accounts payable funds the inventory, leaving net inventory per store negative at $161 thousand.
What is the outlook for the back half of the fiscal year?
CEO Phil Daniele said momentum is strong heading into the back half of fiscal 2025, with the company well prepared for the spring and summer selling season. The filing itself contains no formal numerical guidance.
04—Continue