AutoZone, Inc. (NYSE:AZO) reported record full-year sales of $20.3 billion for fiscal 2026, driven largely by a surge in commercial parts demand. The Memphis-based retailer said fourth-quarter sales rose 5.6% to $6.6 billion, while diluted earnings per share climbed 15.1% to $56.05. These results included a $96 million benefit from tariff refunds and a $15 million non-cash LIFO charge, which is an accounting adjustment for inventory valuation. In plain terms, the core business is gaining ground even as consumer spending remains cautious.

Commercial Strength and Store Expansion

The primary engine for this growth was the commercial segment, which serves professional repair shops rather than individual car owners. Domestic commercial sales grew nearly 11% for the full year, reaching just under $5.8 billion. President and Chief Executive Officer Phil Daniele noted that the company continued to gain market share in a challenging environment, citing improved inventory availability and faster delivery times. The company opened 374 new stores during the year, its highest annual total, including 175 locations in the fourth quarter alone.

A key part of this strategy involves Mega Hubs, which are large distribution centers that supply nearby stores. AutoZone opened 39 of these hubs in fiscal 2026, ending the year with 172. Chief Financial Officer Jamere Jackson explained that commercial programs connected to a Mega Hub network generate 16% more annual sales than other locations. These hubs typically carry over 100,000 product types, allowing them to support a wider range of professional customers. The company plans to open more than 40 Mega Hubs in fiscal 2027, aiming for about 300 over the next three years.

Outlook and International Performance

For fiscal 2027, management expects domestic same-store sales to range from flat to low-single-digit growth. This projection assumes an average ticket increase of about 4%, which should help offset continued softness in customer traffic. Daniele said newer stores are performing slightly ahead of original forecasts, with an average new store generating roughly $1.7 million in first-year sales. By year six, that figure is expected to rise to approximately $2.7 million, with return on invested capital exceeding 20%.

International operations showed mixed results. While constant-currency international same-store sales rose 1.3%, reported figures jumped 10.7% due to favorable exchange rates. The Mexican peso strengthened nearly 9% against the U.S. dollar, providing a $70 million benefit to sales. AutoZone ended the quarter with 1,168 international locations, with about 15% of its total store base now outside the United States. The company plans to open about 400 stores globally in fiscal 2027, with roughly 300 of those in the U.S. and about 120 in Mexico. Capital expenditures are expected to be about $1.65 billion for the coming year, primarily focused on new stores and hub infrastructure.