AutoZone Inc (NYSE:AZO) stock fell 6.81% (As on December 9, 11:42:52 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the first quarter of FY26. Despite these challenges, AutoZone continues to focus on expanding its market share and enhancing shareholder value through disciplined financial management. For the quarter, gross profit, as a percentage of sales, was 51.0%, a decrease of 203 basis points versus the prior year. The decrease in gross margin was driven by a 212 basis point non-cash LIFO impact, partially offset by other net margin improvements. Operating expenses, as a percentage of sales, were 34.0% versus last year at 33.3%. Deleverage was primarily driven by investments to support our growth initiatives. Operating profit decreased 6.8% to $784.2 million. Net income for the quarter was $530.8 million compared to $564.9 million in the same period last year. The Company’s inventory increased 13.9% over the same period last year, driven primarily by growth initiatives and inflation. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $145 thousand versus negative $166 thousand last year and negative $131 thousand last quarter. During the quarter ended November 22, 2025, AutoZone opened 39 new stores in the U.S., 12 in Mexico and two in Brazil for a total of 53 net new stores. As of November 22, 2025, the Company had 6,666 stores in the U.S., 895 in Mexico and 149 in Brazil for a total store count of 7,710.
AZO in the first quarter of FY26 has reported the adjusted earnings per share of $31.04, missing the analysts’ estimates for the adjusted earnings per share of $32.03, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 8.2 percent to $4.63 billion in the first quarter of FY26, missing the analysts’ estimates for revenue of $4.64 billion. Same-store sales rose by 5.5% overall, with domestic growth at 4.8% and international at 11.2%.
Additionally, under its share repurchase program, AutoZone repurchased 108 thousand shares of its common stock during the first quarter, at an average price per share of $3,999, for a total investment of $431.1 million. At the end of the first quarter, the Company had $1.7 billion remaining under its current share repurchase authorization.
Looking ahead, AutoZone remains committed to its growth strategy, emphasizing store expansion and market share acquisition. The company plans to continue its aggressive store opening strategy, aiming to capitalize on the robust demand for automotive replacement parts and accessories.