AutoZone Inc. (AZO) First Take 4Q SSS were much softer than expected; EPS beat driven by tariff refunds

Equity Research 22 September 2026 | 8:18AM EDT

AutoZone Inc. (AZO): First Take: 4Q SSS were much softer than expected; EPS beat driven by tariff refunds

AZO reported 4Q26 EPS of $56.05, above the GS estimate of $54.11 and consensus Kate McShane, CFA | of $54.08 (FactSet), driven by better-than-expected margins. However, we note Goldman Sachs & Co. LLC AZO’s gross margin included a 145 bps benefit from tariff refunds, and excluding this Mark Jordan, CFA benefit, we estimate EPS would have been closer to $51.46. Total company | same-store sales increased 1.5% (ex. FX), well below the GS/consensus estimates of Goldman Sachs & Co. LLC

4.3%/3.8%, as domestic same-store sales increased 1.6% (vs. GS/consensus of Emily Ghosh | 4.6%/3.3%) and international (ex. FX) increased 1.3%. Domestic commercial sales Goldman Sachs & Co. LLC increased 8.6% y/y, below the GS estimate of 10.8% and below the year-to-date growth of 11.6% through 3Q. Management attributed the softer sales result to a Nishi Agarwal | difficult selling environment during the first eight weeks of the quarter, though noted Goldman Sachs India SPL that sales trends strengthened during the final eight weeks. EBIT margin of 20.0% Grace Chee (+81 bps y/y) came in above the GS estimate of 19.5% and consensus of 19.4%, as | Goldman Sachs & Co. LLC gross margin increased 182 bps y/y to 53.3% (vs. GS/consensus of 51.3%/52.0%) Samantha Chiang while SG&A as a % of sales increased 101 bps y/y to 33.4% (vs. GS/consensus of | 31.8%/32.5%). Excluding tariff refunds, we estimate EBIT and gross margin to be Goldman Sachs & Co. LLC

approximately 18.5% and 51.9%, respectively.

Analysis n Domestic same-store sales increased 1.6% y/y during the quarter. AZO also reported total company and international same-store sales growth of 2.7% and 10.7%, respectively, and on a constant currency basis, total company same-store sales increased 1.5% and international increased 1.3%. n Domestic commercial sales increased 8.6% y/y, below the GS estimate of 10.8% and marking the metric’s lowest quarterly growth rate of the year. This compares to growth of 10.4% during the prior quarter, and 11.6% for the year-to-date period ending in 3Q. n Gross margin increased 182 bps y/y to 53.3%, above the GS estimate of 51.3% and consensus of 52.0%, driven by favorable impacts from tariff refunds (145 bps) and non-cash LIFO impacts (105 bps), and partially offset by headwinds from a higher DIFM mix. Excluding the tariff refunds, we estimate gross margin to be approximately 51.9%. n SG&A expense increased 8.9% y/y to $2,201mn; the SG&A expense ratio of 33.4% came in above the GS estimate of 31.8% and consensus of 32.5%, with deleverage primarily driven by growth investments.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs AutoZone Inc. (AZO)

n EBIT margin of 20.0% increased 81 bps y/y and compares to the GS estimate of 19.5% and consensus of 19.4%. Excluding the tariff refunds, we estimate EBIT margin to be approximately 18.5%. n AZO ended the quarter with $7,736mn of inventory (+10% y/y); the company’s accounts payable to inventory ratio of 111.1% compares to 114.2% during the prior year and 111.1% during the prior quarter. Inventory per store of $963k compares to $918k in the prior year and $962k in the prior quarter. n AZO repurchased $698mn worth of shares during the quarter (223k shares at an average price of $3,125), above the GS estimate of $500mn. n The company’s adj. debt to EBITDAR ratio of 2.5x compares to 2.5x during the prior year and 2.5x during the prior quarter.

Exhibit 1: AZO actual results vs. GS estimates In $ millions, except per share data

Variance Favorable 4Q25 4Q26 4Q26 (Unfavorable) Actual Actual GS est. vs.…