Autozone - $AZO - Earnings Analysis: Continued growth in domestic DIY and commercial sales.

Business Model

AutoZone generates revenue through the retail and distribution of automotive replacement parts and accessories in the Americas.

Revenue Sources

• Sales of new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products.
• Commercial sales program providing prompt delivery of parts and other products and commercial credit to local, regional, and national repair garages, dealers, service stations, fleet owners, and other accounts.
• Online sales through www.autozone.com and www.autozonepro.com.
• Sales of ALLDATA brand of automotive diagnostic, repair, collision, and shop management software through www.alldata.com.

Revenue Distribution by Channel

• Domestic Commercial sales represented 31% of domestic auto parts sales and 27% of total company sales for Q2 2025.

Income Statement Analysis

• Net sales increased by 2.4% year-over-year, driven by domestic and international growth.
• Operating profit decreased by 4.9% due to investments in growth initiatives, leading to operating expense deleverage.
• Net income decreased by 5.3% due to lower operating profit.
• Diluted earnings per share decreased by 2.1% due to lower net income, partially offset by a decrease in diluted shares outstanding.

Balance Sheet Analysis

• Total assets increased by 8.37% year-over-year, indicating growth in the company's resources.
• Total stockholders' deficit decreased by 7.85% year-over-year, reflecting the impact of share repurchases and net losses.
• Total Liabilities increased by 9.7% year-over-year

Cash Flow Analysis

• Cash flow from operations increased year-over-year, indicating improved operational efficiency.
• Capital spending also increased year-over-year, reflecting investments in growth initiatives such as new stores and distribution centers.

Capital Allocation

AutoZone allocates capital towards share repurchases, store expansion, and strategic investments in distribution centers and technology to drive growth and improve customer service. In Q2 2025, $329.4 million was used to repurchase shares. The company had $1.3 billion remaining under its current share repurchase authorization.

Management Commentary

We continue to be pleased with our strategy to grow our domestic DIY and Commercial sales.

Our international business also continued to deliver strong results and same store sales grew 9.5% on a constant currency basis.

While currency rate moves pressured reported sales and earnings, our international performance remains encouraging as we continue to focus on opening more stores in these markets.

Overall Sentiment: Positive, with a focus on growth in domestic and international markets, but acknowledging the impact of currency headwinds.

Disclaimer: This report is for informational purposes only and not investment advice. The analysis is based on limited information and subject to change. Investing in securities involves risks, including potential loss of principal. Past performance doesn't guarantee future results. Always conduct your own research, understand the risks, and consult a financial professional before making investment decisions.