AutoZone Q3 Sales Rise 5.4% Profit Falls Amid Margin Pressure

AutoZone, Inc. reported fiscal third-quarter results with net sales rising 5.4% year-over-year to $4.46 billion, surpassing analyst estimates and marking the company's first revenue beat in five quarters. Despite the sales growth and a 3.2% increase in same-store sales driven primarily by domestic performance, diluted earnings per share fell to $35.36, missing the consensus estimate and declining from the previous year. The gross margin contracted by 77 basis points to 52.7%, pressured by factors such as higher inventory shrink, increased commercial mix, startup costs for new distribution centers, and a non-cash LIFO charge. Operating expenses increased to 33.3% of sales, mainly due to higher self-insurance costs and investments in growth initiatives. CEO Phil Daniele highlighted ongoing currency headwinds impacting reported sales and earnings but expressed confidence in international expansion as AutoZone added 84 net new stores across the U.S., Mexico, and Brazil, bringing the total to 7,516. Investor sentiment remains optimistic about the company’s momentum entering the summer selling season despite the profit miss.