AutoZone (AZO) Q1 2025 earnings summary

Executive summary

• Net sales rose 2.1% year-over-year to $4.3 billion, with total company same store sales up 0.4% and domestic same store sales up 0.3%; international same store sales up 13.7% constant currency.

• Net income was $564.9 million, down 4.8% year-over-year; diluted EPS was $32.52, nearly flat, impacted by FX headwinds.

• Domestic DIY sales declined 0.4%, while commercial sales grew 3.2%; international sales were strong but faced significant FX headwinds.

• Company continues to invest in customer service, supply chain, and store growth, with over $1 billion in CapEx planned for the year.

• Opened 34 new stores globally in the quarter, bringing total to 7,387.

Financial highlights

• EBIT was $841 million, down 0.9% year-over-year; on a constant currency basis, EBIT would have been up about 1%.

• Gross margin improved by 16 basis points to 53%; excluding LIFO, gross margin rose 21 basis points due to merchandising margin gains.

• Free cash flow was $565 million, down from $595 million last year, due to lower net income and higher CapEx.

• Interest expense rose 18% to $107.6 million, driven by higher debt ($9B vs. $8.6B last year).

• Cash and cash equivalents at quarter end were $304 million; merchandise inventories increased 8.7% year-over-year.

Outlook and guidance

• Management expects modest improvement in both DIY and commercial sales in Q2 as comps ease and growth initiatives gain traction.

• FX headwinds projected to impact Q2 revenue by $95 million, EBIT by $30 million, and EPS by $1.30 if current rates persist.

• Full-year FX impact could reach $355 million on revenue, $120 million on EBIT, and $4.90 on EPS if spot rates hold.

• Store openings to accelerate, with about 100 new international stores planned for the year.

• Management remains optimistic for growth in the remainder of the fiscal year, citing improved customer service initiatives and market share growth.