AutoZone, Inc.

AutoZone, Inc. is an American retailer and distributor of automotive replacement parts and accessories, operating 7,856 stores across the United States, Mexico, and Brazil as of its fiscal third quarter of 2026. The company sells to both do-it-yourself consumers and commercial repair shops, generates no revenue from repair services, and has returned virtually all of its free cash flow to shareholders through share repurchases for over two decades. In fiscal 2025, AutoZone produced $18.9 billion in revenue and $2.5 billion in net income.

This is a story about a business with an almost mechanical quality: an aging vehicle fleet creates a growing pool of parts demand, a negative working capital model funds itself, and a relentless buyback program shrinks the share count year after year. But fiscal 2025 introduced a wrinkle. A tariff-driven surge in product costs triggered $104 million in non-cash LIFO charges that compressed operating margins to 19.1%, down from 20.5% the prior year, and net income fell 6.2% even as revenue grew 2.4%. The central question the file turns on is whether that margin compression is a one-time reset that the buyback can power through, or whether tariffs, an accelerating commercial mix shift, and the sheer scale of the capital deployment program have changed the arithmetic of the compounder.

A second question sits underneath: AutoZone is spending $1.6 billion a year on capex — more than double its pre-pandemic run rate — to fund an aggressive store expansion and mega hub build-out that management says will make this a faster-growing business. If the growth materializes, the model works beautifully. If it does not, the company has repurchased 91% of its shares since 1998 and may find the remaining float insufficient to sustain the EPS growth trajectory investors have come to expect.