Earnings Call Intelligence Subscribe
Home › Call Sheets › AZO › Q2'26
Call sheet · Q2'26

AutoZone (AZO)

Q2'26 earnings call · held 2026-03-03 · compared with the Q1'26 call · management-credibility review
9/12
Disclosure score
2 medium, 4 low flags
Financial quality
Bottom line
The sleeper story is operational discipline - management proved they can flex SG&A costs with demand volatility, slowing per-store expense growth to 3.9% from 5.8% despite continued expansion. The obvious weather excuse is actually credible given their granular two-week impact data, but it masks a more important signal: commercial sales per program are decelerating as they near saturation of existing footprint. The binding constraint is no longer store count but productivity per location as easier growth gets harvested. Most revealing quote: 'We managed our SG&A per store lower as sales softened' - contradicts their prior 'fixed investment' narrative. My view changes if Q3 doesn't show the promised snapback in commercial trends or if SG&A discipline disappears when sales recover.

The 30-second version

  • SLEEPER STORY: SG&A per store decelerated meaningfully while sales wobbled - operational discipline is quietly improving
  • Weather excuse covers real commercial deceleration - but it's temporary demand shifting, not share loss
  • LIFO charges are eating 266 basis points of EPS growth - this is the real margin story everyone's missing

What changed this quarter

MetricQ1'26Q2'26Change
Total Sales Growth8.2% YoY8.1% YoY10 bps deceleration
Domestic Same Store Sales4.8%3.4%140 bps deceleration
DIY Same Store Sales1.5%1.5%Flat sequential
Commercial Sales Growth14.5% YoY9.8% YoY470 bps deceleration
EPSDown 4.6% YoYDown 2.3% YoY230 bps improvement but still negative
EPS Excluding LIFOUp 8.9% YoYUp 7.1% YoY180 bps deceleration
Gross Margin51.0% (down 203 bps)52.5% (down 137 bps)150 bps sequential improvement, 66 bps less pressure
EBIT GrowthDown 6.8% YoYDown 1.2% YoY560 bps improvement
SG&A Per Store Growth5.8% YoY3.9% YoY190 bps deceleration - key operational discipline signal
Free Cash Flow$630M$15M97.6% collapse due to timing

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
Read the full AZO Q2'26 report Subscribe
About Research ↗Call SheetsCredibility IndexMissed PromisesScreens13F BooksData & InstitutionalPrivacyTermsSubscribe
This is a free preview. The full write-up and promise ledger are published to subscribers on Substack.
Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

Follow what management promises next

Get free previews of our earnings-call research: the key changes, management scores, and questions worth investigating. Subscribe for full call sheets and deeper analysis.

Subscriptions are managed by Substack. If the form does not load, subscribe directly. Or follow the RSS feed.