AutoZone, Inc.

AutoZone, Inc. (NYSE: AZO) is the largest retailer and distributor of aftermarket automotive replacement parts and accessories in the Americas. At the end of fiscal 2025 it operated 7,657 stores — 6,627 in the United States, 883 in Mexico and 147 in Brazil — and generated $18.94 billion of net sales. It sells hard parts, maintenance items and accessories to two very different customers: the do-it-yourself motorist who walks in the door, and the professional technician whose shop it supplies through a commercial sales program that now reaches 94% of its domestic stores.

The story here is a compounder whose engine is counter-intuitive: the worse the new-car market and the older the car park, the better AutoZone's business. It does not repair cars; it sells the parts that other people use to repair them, and roughly 85% of its sales are failure- and maintenance-related — the categories a driver cannot easily defer. For most of its public life that produced steady mid-single-digit sales growth, wide margins and a share count that has shrunk for two decades, funded by an unusually aggressive buyback program and a balance sheet that runs a stockholders' deficit on purpose.

What has changed is the pace of investment. AutoZone has gone from opening roughly 200 stores a year to 374 in fiscal 2026, the most in its history, and is targeting about 400 in fiscal 2027. At the same time its returns are being dented: adjusted after-tax ROIC on a trailing basis has fallen to 36.3% from 41.3% for fiscal 2025, and the DIY customer is trading down and deferring purchases. The file turns on a single question: whether the accelerated store build and the commercial land-grab earn their cost of capital before the consumer's fatigue proves structural rather than cyclical.