AutoZone Sees 8.1% Sales Growth, Non-Cash LIFO Charge Cuts EPS
AutoZone’s Q2 sales rose 8.1% to $4.3B while EPS fell 2.3% to $27.63 due to a $59M non-cash LIFO charge and late-season storms that reduced commercial sales growth to just over 1% in two weeks. Excluding LIFO, EBIT increased 7.2% and EPS would have grown 7.1%.
1. Financial Results
AutoZone posted Q2 fiscal 2026 sales of $4.3B, an 8.1% increase, while EPS fell 2.3% to $27.63 due to a $59M non-cash LIFO charge; year-to-date LIFO costs reached $157M, with $60M expected in each of the next two quarters for a total of $277M versus $64M last year.
2. Winter Storm Impact
Late-season winter storms in weeks 10 and 11 suppressed commercial sales growth to just over 1%, compared with over 12% growth in the other weeks, dragging overall same-store commercial performance despite a 9.8% year-over-year rise.
3. Underlying Operating Performance
Excluding LIFO, gross margin was slightly positive year over year and EBIT rose 7.2%, while underlying EPS would have increased 7.1%, highlighting resilient operating performance despite tariff-driven cost pressures and mix shifts toward the commercial segment.
4. Network Expansion
The company expanded its commercial network by adding 128 net new DIFM programs, totaling 6,310 domestically, and opened five Mega Hubs this quarter for a total of 142, with a plan to open about 30 more in fiscal 2026.