AutoZone Inc.

The stable outlook on AutoZone Inc. reflects our expectation that solid operating results and a consistent financial policy will result in adjusted leverage being sustained in the mid-3x area. We could lower our rating on AutoZone if: Credit metrics weaken, including adjusted debt to EBITDA being sustained around 4x; Elevated competition or operational challenges pressure results leading us to reassess its competitive position. We could raise our rating on AutoZone if: Adjusted debt to EBITDA is maintained around 3x; Sustained market share gains in both its DIY and commercial business segments. S&P Global Ratings believes there remains high, albeit moderating, uncertainty about the evolution of the coronavirus pandemic and its economic effects. Vaccine production is ramping up and rollouts are

...The company is a market leader in the do-it-yourself (DIY) segment of aftermarket auto parts and is growing its presence in the do-it-for-me commercial segment. AutoZone's wide store footprint, supply chain capabilities, and solid brand awareness have contributed to its market share lead in the DIY segment. The company continues to expand its lead in this channel, taking share from independents, mass merchandisers, and smaller online competitors through inventory and pricing investments. We believe this segment has experienced outsized growth during the pandemic as consumers elected to perform work on their vehicles at home out of safety considerations and because they had additional free time. As the U.S. economy recovers this year, we expect growth in the commercial, or do-it-for-me, market to accelerate. AutoZone remains underpenetrated in this segment, with less than 4% share in the approximately $75 billion market, but we believe the company's ongoing investments will lead to gains...

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