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October 28, 2026 • 3 min read
Understanding how retail giants sustain profitability in a shifting economic landscape requires peeling back the layers of their financial statements. By digging into AutoZone’s income statement in their latest Form 10-K filing, we can see how the auto parts retailer navigates supply chain inflation, commercial market expansion, and an aging automotive fleet to turn top-line momentum into bottom-line returns.
For the fiscal year ended August 29, 2026, AutoZone achieved record net sales of $20.34 billion, a 7.4% increase compared to $18.94 billion in fiscal 2025. AutoZone's core customer base is closely tied to vehicles aged seven years or older—affectionately known in company filings as "our kind of vehicles"—which are typically out of warranty and require more frequent upkeep.
AutoZone breaks down its product sales into three distinct buckets:
The DIY automotive retail business was supplemented by strong growth in AutoZone’s commercial program (selling directly to professional repair shops and fleets), where domestic commercial sales jumped 10.6% to add $550.1 million in new volume.
The visual breakdown below traces how AutoZone transforms its $20.34 billion in revenue into gross profit, absorbs operating expenses, and delivers earnings for shareholders.
Because AutoZone manages its distribution network and vendor contracts on a centralized basis, cost of sales—which totaled $9.69 billion—is not allocated across individual product lines in the diagram, but directly against total revenue.
Gross margin narrowed slightly by 29 basis points to 52.3%, primarily driven by a non-cash LIFO (Last-In, First-Out) inventory charge of $192 million versus $64 million the prior year. Operating expenses (SG&A) totaled $6.92 billion (34.0% of net sales), led by compensation expenses of $4.18 billion as the retailer continued investing in customer-facing store talent and expanding distribution infrastructure.
Ultimately, operating profit reached $3.72 billion (an 18.3% operating margin), and after accounting for $472.6 million in net interest expense and $677.9 million in income taxes, AutoZone closed the year with $2.57 billion in net income.
AutoZone passed a major operational milestone in fiscal 2026, ending the year with 8,031 stores (6,863 in the U.S., 1,001 in Mexico, and 167 in Brazil) after opening 374 net new locations without closing a single store. International same store sales demonstrated robust top-line traction, rising 13.5% (or 2.2% in constant currency).
The company also reaffirmed its aggressive share repurchase playbook. AutoZone repurchased approximately 579,000 shares for $2.03 billion during the fiscal year. This relentless reduction in share count helped propel diluted earnings per share (EPS) up 5.3% to $152.55, outpacing net income growth.
As AutoZone continues to battle primary peers like O’Reilly Automotive and Advance Auto Parts, its challenges lie in managing supply chain costs and navigating the gradual industry transition toward electric vehicles—which generally require fewer moving parts and less frequent failure replacements. However, with the average age of vehicles on American roads continuing to hover at historic highs near 12.5 years, AutoZone's dominant hub distribution model and high-margin failure parts business position it well to capture ongoing aftermarket demand.
Last updated: October 28, 2026
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