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AutoZone (AZO) delivered a mixed fiscal 4Q25 report, marked by a fifth consecutive EPS miss despite solid topline performance. The company’s ongoing expansion and solid same store sales growth highlight underlying business strength, though the earnings shortfall -- driven in part by a large inventory-related charge -- tempers the near-term outlook.

• Q4 EPS missed expectations, weighed down by a significant $80 mln LIFO (Last-In, First-Out) charge. This non-cash accounting charge was tied to rising inventory costs, primarily due to inflationary pressure on auto parts, exacerbated by tariffs on imported goods.
• Company-wide same store sales rose 5.1% in constant currency, reflecting healthy demand trends across both the domestic and international segments.
• Domestic SSS increased 4.8%, benefiting from higher pricing driven by tariff-related cost pass-throughs and sustained strength in commercial sales.
• The company continues to see solid demand for hard parts, including batteries, brakes, and engine components, suggesting resilience in vehicle maintenance activity amid an aging car fleet.
• International SSS climbed 7.2% in constant currency, led by strength in the DIY segment.
• Expansion in Mexico and Brazil was notable, where rising brand awareness and favorable macro trends are helping AZO gain traction. AZO opened 141 net new stores globally during Q4, including 109 in the U.S., 18 in Mexico, and 14 in Brazil.
• International expansion remains a key pillar of the company’s long-term strategy, with management reiterating plans to accelerate store openings in Latin America and begin testing new markets in the Caribbean and Central America in FY26.

Briefing.com Analyst Insight:

AZO’s Q4 results tell a two-sided story. On the one hand, strong same store sales, especially internationally, and continued momentum in commercial sales indicate a business that’s executing well operationally. On the other, another EPS miss -- this time due in part to an $80 mln LIFO charge -- raises questions about margin predictability and inventory cost management. The LIFO charge is more of a near-term accounting headwind than a structural issue, but persistent EPS underperformance could weigh on investor sentiment. That said, the underlying demand for AZO’s core products remains strong, and the company’s aggressive international expansion could be a meaningful growth lever over time.