Autozone Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Bret Jordan - Jefferies LLC - Analyst : Could you talk about the maturation schedule of the new stores now that it's become a very -- I guess, a more significant item as far as the ramp and then incremental investment that's required, I think you're talking about a couple of DCs internationally. But as far as domestic store growth, are there more DCs or accelerated hub expansion as you build this new store base? I mean just sort of trying to think about an SG&A expense at the front, but when do we start getting the return?

Question: Bret Jordan - Jefferies LLC - Analyst : Okay. Great. A quick question on the commercial growth on a two-, three-year basis. Could you sort of parse out what might be national account versus domestic? I mean, obviously, not a lot of new national accounts entering the market. Is this skewed more to up and down the street business?

Question: Barath Rao - J.P. Morgan Securities LLC - Analyst : It's Barath Rao, on for Chris. So on DIY, given the sequential slowdown, I know you said weather was a headwind in the middle four weeks. But can you help us parse out how much of that was additionally attributable to any government shutdown noise or any like sort of observable deterioration in the underlying trend or demand?

Question: Barath Rao - J.P. Morgan Securities LLC - Analyst : Got it. That's helpful. And then a quick one on SG&A. So previously, you talked about mid-single-digit SG&A store growth for the year and came in at the higher end in 1Q despite softer sales. So now that you're accelerating store growth and you said 2Q SG&A will be similarly up to 1Q. Can you help us understand like how does the curve of that SG&A per store growth look throughout the year? And does that pretty much moderate into next year?

Question: Skylar Tennant - Morgan Stanley & Co. LLC - Analyst : This is Skylar Tennant on behalf of Simeon. On our first question, we wanted to ask whether the consumer is showing any signs of elasticity to higher prices or whether you're seeing any signs of trade down?

Question: Skylar Tennant - Morgan Stanley & Co. LLC - Analyst : Okay. And as a follow-up, how are you thinking about inflation? Has it impacted the entire product catalog? And for items not impacted, are you seeing any signs of demand elasticity there? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 3:00PM, AZO.N - Q1 2026 Autozone Inc Earnings Call

Question: Shervin Zand - Truist Securities Inc. - Analyst : This is Shervin on for Scot. LIFO charges were less than expected this quarter, and now you've lowered your expectation of the headwind for the next three quarters by around 25%. Just want to know if this is from just greater tariff reductions or maybe more focused mitigation efforts? And then like could that taper like the upper end of your same SKU expectations like for inflation throughout the year?

Question: Ariana Warden - Citigroup Global Markets Inc. - Analyst : This is Ariana on for Steve. My first question is, can you give any color on the merch margin performance in the quarter? And like any color on the outlook for this fiscal year?

Question: Ariana Warden - Citigroup Global Markets Inc. - Analyst : And then my follow-up kind of piggyback off the previous question. So like where do you kind of expect SKU to peak in 3Q as it accelerate sequentially?

Question: Mark Jordan - Goldman Sachs & Company, Inc. - Analyst : This is Mark Jordan on for Kate McShane. The first question, I think, might be a quick one, but it's just what drove the difference between same SKU inflation in the retail business and the commercial business? Is that just the mix of the parts that are being sold?

Question: Mark Jordan - Goldman Sachs & Company, Inc. - Analyst : Okay. Perfect. And then in terms of product categories, just wondering if there's anything to read through there in terms of the health of your core customer. Which categories were stronger and which were weaker during the quarter? And are you still seeing improvement on the discretionary side?

Question: Mark Jordan - Goldman Sachs & Company, Inc. - Analyst : And just thinking about the comp there, is that mostly being same SKU inflation driven on that side? Or is units up as well?

Question: Michael Montani - Evercore Inc - Analyst : It's Mike Montani on for Greg Melich. I just wanted to ask a little bit about the underlying performance in merch margin, if I could. So that was strong in the quarter, Jamere, and wondering how to think about that into next quarter? And then also if you look at private label supply chain optimization, price optimization, like can you help us just understand a little bit more the drivers that are offsetting that 30 to 40 bps mix headwind that you referenced? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 09, 2025 / 3:00PM, AZO.N - Q1 2026 Autozone Inc Earnings Call

Question: Vicky Liu - BofA Securities, Inc. - Analyst : This is Vicky Liu on for Robby Ohmes. Can you talk about your expectation for early calendar 2026 as we'll likely have the combined impact of a hot summer, cold winter and maybe some tax refund tailwind from the One Big Beautiful Bill?

Question: Justin Kleber - Robert W. Baird & Co., Inc. - Analyst : I wanted to ask the SG&A question just one more time. I apologize. I understand the impact from store growth and how that builds from here, but just wanted to clarify that growth on a per store basis, are you telling us we should expect that 5.9% pace in 1Q to effectively continue? Or are there certain offsetting levers to bend that growth curve on a per store basis as you start to annualize some of these investments to improve service and delivery speed?

Question: Justin Kleber - Robert W. Baird & Co., Inc. - Analyst : Okay. And then if I could just follow up on the international outlook. You mentioned softer trends in Mexico, but the two-year stack did improve sequentially. So was that just driven by Brazil? And then would you expect that two-year stack to remain relatively stable internationally, just as we think out over the next few quarters?