Shares of AutoZone (NYSE:AZO) fell 3.95% in premarket trading after the company reported third-quarter results that exceeded earnings expectations but came in slightly below revenue forecasts.
Earnings top expectations while revenue falls short
For the quarter ended May 9, 2026, AutoZone posted adjusted earnings per share of $38.07, beating analyst expectations of $36.22 by $1.85.
Revenue rose 8.4% year-over-year to $4.84 billion from $4.46 billion in the prior-year period, although the figure missed analyst estimates of $4.86 billion.
Domestic same-store sales increased 4.1% during the quarter, while company-wide same-store sales grew 3.9% on a constant currency basis.
Gross margin pressured by inventory accounting impact
The market reaction appeared to focus primarily on the revenue miss despite the stronger-than-expected earnings performance.
Gross margin declined by 57 basis points to 52.2%, mainly due to a 77 basis point non-cash LIFO inventory accounting impact.
Meanwhile, operating expenses as a percentage of sales improved slightly to 33.1%, compared with 33.3% in the same period last year, supported by sales growth and cost management efforts.
CEO highlights strong execution and customer service
“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,” said Phil Daniele, President and Chief Executive Officer.
“Along with strong domestic sales results, we managed our expenses well and returned to an operating margin north of 19% for the quarter.”
Net income and store footprint continue to expand
Net income increased to $641.5 million during the quarter, up from $608.4 million a year earlier.
AutoZone opened 82 new stores globally over the period, including 57 locations in the United States, 20 in Mexico and five in Brazil.
The company’s total store count reached 7,856 locations worldwide.