AutoZone earns $56.05 a share and the stock rises 4.7%, but tariff refunds did much of the margin work

AutoZone (AZO) reported fourth-quarter earnings of $56.05 a share on Tuesday, up from $48.71 a year earlier, on net sales of $6.59 billion, up 5.6%, according to the company's release. The quarter covered the 16 weeks to August 29. Net income rose to $931.6 million from $837.0 million.

The stock was up 4.7% at $2,935 shortly before 10 a.m. ET, from a Monday close of $2,803.25, according to Nasdaq data. Monday's close was just above the stock's 52-week low of $2,796.85, and shares remain far below their 52-week high of $4,332.68.

AutoZone's growth is coming from the trade counter rather than the shop floor, and that trade has a size. 224,738 independent auto repair shops are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses with chains and franchises excluded. Commercial sales up 8.6% against domestic same-store sales up 1.6% is a read on how those shops are trading, and it is a more useful indicator of independent repair demand than anything in the DIY numbers. What that business actually runs on is in our operating playbook for repair shops.

The number behind the margin

Gross margin was 53.3% of sales, up 1.82 percentage points from a year ago. AutoZone's release breaks that down, and the detail changes the picture:

• Tariff refunds added 1.45 points. On $6.59 billion of sales, that works out to roughly $96 million of gross profit in the quarter.
• A non-cash LIFO inventory accounting benefit added 1.05 points.
• Together that is 2.50 points, more than the 1.82-point total gain. Without those two items, gross margin would have been roughly 0.7 points lower than last year. The company said a higher mix of commercial sales partly offset the gains.

Operating expenses also rose faster than sales, to 33.4% of sales from 32.4%, which AutoZone attributed mainly to growth initiatives. Operating profit still grew 10.1% to $1.32 billion. Earnings per share grew faster, about 15%, helped by buybacks.

Who is buying: repair shops, not weekend mechanics

The growth is in the professional business. Domestic commercial sales, parts sold to repair shops and garages, rose 8.6% to $1.91 billion. Total domestic same-store sales rose only 1.6%, which points to a weaker do-it-yourself business, though the release does not break DIY out separately. International same-store sales rose 10.7%, or 1.3% in constant currency, so most of that figure was the exchange rate.

CEO Phil Daniele said the first eight weeks of the quarter were "a difficult selling environment" and results "strengthened" over the last eight weeks, and that he expects sales in all three of its countries to accelerate in fiscal 2027. For independent repair shops the relevant line is speed: Daniele said the company keeps improving delivery times, and it opened 16 more of its large "Mega Hub" stores in the quarter. The company opened 175 stores in the quarter and ended the year with 8,031.

Full year and buybacks

Fiscal 2026 sales were $20.3 billion, up 7.4%, and earnings per share rose 5.3% to $152.55. AutoZone bought back $2.0 billion of stock during the year at an average of $3,496 a share, about 19% above where the shares traded Tuesday morning. It spent $697.5 million in the fourth quarter at an average of $3,125 and has $1.6 billion left under its authorization. Total debt was about $9.08 billion at year end, and inventory was up 10.1% from a year earlier.

Sources: AutoZone release; release tables via Stock Titan; WSJ; Nasdaq quote data at 9:53 a.m. ET. This is market information, not investment advice.