Summary: AutoZone Inc. (NYSE:AZO) delivered adjusted third-quarter earnings per share above consensus but reported revenue slightly below expectations, leading to a negative market reaction ahead of the opening bell. The quarter included a rise in net income and ongoing store openings, offset by a gross margin decline largely attributed to a non-cash LIFO impact.
AutoZone reported adjusted EPS of $38.07 for the quarter ended May 9, 2026, beating the analyst consensus of $36.22 by $1.85. Revenue, however, came in at $4.84 billion, which missed the estimate of $4.86 billion. The reported sales figure still represented an 8.4% increase from $4.46 billion in the same period a year earlier.
Same-store sales trends showed positive momentum domestically, with a 4.1% gain in domestic same-store sales. On a constant-currency basis, total company same-store sales rose 3.9%. Despite the top-line shortfall relative to consensus, AutoZone was able to expand underlying sales compared with the prior year.
Gross margin contracted by 57 basis points, settling at 52.2% for the quarter. Management attributed the decline chiefly to a 77 basis point non-cash LIFO impact. On the cost side, operating expenses as a percentage of sales improved to 33.1% from 33.3% a year earlier, reflecting both sales growth and tighter expense control.
Net income for the quarter rose to $641.5 million, up from $608.4 million in the comparable quarter last year. The company continued to expand its retail footprint, opening 82 new stores worldwide during the quarter - including 57 in the U.S., 20 in Mexico and 5 in Brazil - bringing total store count to 7,856.
Commenting on the results, Phil Daniele, President and Chief Executive Officer, said: "I want to thank our AutoZoners across the globe for delivering on our promise of 'WOW' customer service and strong financial results this past quarter. Along with strong domestic sales results, we managed our expenses well and returned to an operating margin north of 19% for the quarter."
The market reaction favored the revenue miss over the earnings beat: shares fell 3.95% in premarket trading following the release. Investors appeared to focus on the slight shortfall in sales versus consensus despite solid profitability metrics and continued physical expansion.
Overall, the quarter presents a mix of positive operational progress - sales growth, improved operating expense ratios, higher net income and ongoing store openings - alongside margin pressure from inventory accounting and a revenue result that missed expectations by a narrow margin.
Contextual note: The reporting reflects results for the quarter ended May 9, 2026, and uses the company-provided figures and management commentary on operating margin and sales performance.