01—Abstract
Summary
Summary of the 8-K filed September 23, 2025. Cited figures are marked; the original filing is the authoritative source.
AutoZone reported fiscal fourth-quarter 2025 results (16 weeks ended August 30, 2025) with total company same store sales up 5.1%a on a constant-currency basis (domestic up 4.8%, international up 7.2% constant currency).
Net sales were $6.2 billionb, up only 0.6% reported, but up 6.9% when adjusted for the extra week in last year's 17-week quarter. Profitability weakened: gross margin fell 98 basis points to 51.5%, driven by an $80 million non-cash LIFO charge (a 128 bp headwind), and operating expenses rose to 32.4% of sales from 31.6% as the company invested in growth initiatives. Operating profit fell 7.8% to $1.2 billion, and diluted EPS declined 5.6% to $48.71.
For the full fiscal year 2025, net sales reached $18.9 billionc (up 2.4% reported), diluted EPS fell 3.1% to $144.87, and net income declined 6.2% to $2.5 billion. The full-year LIFO impact was a $64 million charge versus a $40 million benefit last year. Management highlighted an aggressive store expansion plan, with 304 net new stores opened in the year (141 in the quarter) and a total count of 7,657 stores.
Inventory grew 14.1% year over year, which was largely tied to growth initiatives, and the company repurchased $1.5 billiond of stock during the year, leaving $632.3 million under its current authorization. For investors, the key tension is between solid top-line momentum and margin compression from heavier investment in growth, LIFO accounting, and higher operating expenses.
Management signaled it will open stores aggressively in the new fiscal year and expects its disciplined approach to lift earnings and cash flow over time. Operating cash flow was $3.16 billion for the year, while capital spending rose to $1.37 billion.
02—Key points
Key Highlights
- Total company same store sales rose 5.1% on a constant-currency basis in Q4 (domestic +4.8%, international +7.2%), and domestic DIY and Commercial sales improved sequentially through the quarter.
- Q4 gross margin declined 98 bps to 51.5%, with a 128 bp non-cash LIFO charge ($80 million) as the main driver, partially offset by higher merchandise margins.
- Operating expenses rose to 32.4% of sales from 31.6%, reflecting investments to support growth initiatives.
- Q4 operating profit fell 7.8% to $1.2 billion; diluted EPS declined 5.6% to $48.71.
- FY2025 diluted EPS fell 3.1% to $144.87 and net income fell 6.2% to $2.5 billion, while net sales grew 2.4% to $18.9 billion.
- The company opened 304 net new stores in FY2025 (141 in Q4), bringing the total to 7,657, and management plans to open stores aggressively in the new year.
- Shareholder returns remained significant: $1.5 billion of buybacks in FY2025 with $632.3 million left under the current authorization; inventory rose 14.1% year over year, and the Adjusted Debt/EBITDAR ratio held at 2.5x.
03—Questions
Frequently Asked Questions
Why did reported sales grow only 0.6% in the quarter when same store sales rose 5.1%?
The fourth quarter had 16 weeks in fiscal 2025 versus 17 weeks in fiscal 2024. Excluding the extra week in the prior year, adjusted sales grew 6.9%, which better reflects underlying growth. Same store sales growth of 5.1% on a constant-currency basis indicates healthy demand from existing stores.
What caused the decline in gross margin and profit?
Gross margin fell 98 basis points to 51.5%, mainly due to a non-cash LIFO inventory charge of $80 million (128 bps), which compares with no LIFO charge in the prior-year quarter. Higher merchandise margins partly offset this. Operating expenses also rose to 32.4% of sales from 31.6%, reflecting investments in growth, so operating profit fell 7.8%.
Is AutoZone's balance sheet and capital return program still strong?
Total debt was $8.8 billion, down from $9.0 billion a year earlier, and the Adjusted Debt/EBITDAR ratio was 2.5x, unchanged year over year. The company repurchased $1.5 billion of stock during fiscal 2025 and had $632.3 million remaining under its authorization. Stockholders' deficit narrowed to $(3.4) billion from $(4.7) billion, while cash flow from operations was $3.16 billion.
What is the outlook for store growth and inventory?
Management said it expects to aggressively open stores in the new fiscal year and continue focusing on market share growth. Inventory rose 14.1% year over year, driven primarily by growth initiatives, while net inventory per store improved to negative $131 thousand from negative $163 thousand a year earlier. Capital spending increased to $1.37 billion in fiscal 2025 from $1.07 billion.
How did the international business perform?
International same store sales grew 7.2% on a constant-currency basis in the quarter, although reported growth was 2.1% due to currency effects. For the full year, international same store sales were down 3.2% as reported and up 9.3% on a constant-currency basis. The company opened 45 stores in Mexico and 6 in Brazil during the quarter.
04—Continue