By Nicholas G. Miller
AutoZone reported higher fiscal third-quarter sales boosted by domestic growth, but it said weather slowed momentum as the quarter progressed.
"This slowdown in sales was caused by unseasonably cool weather impacting our heat-related categories, which normally begin to ramp this time of year as summer heat begins to take hold," said Chief Executive Phil Daniele, citing lower volumes in categories including air conditioning, starting and charging.
Shares fell 12% to $3,008.19. The stocks of AutoZone competitors O'Reilly Automotive and Advance Auto Parts also fell modestly following AutoZone's earnings.
Daniele said the company expects those categories to rebound given what is likely to be a hotter-than-normal summer.
"We believe that is going to change pretty rapidly here as we move into the summer months," he said.
The company also said it is still seeing weakness in its international business due to slowing economies in Mexico and Brazil.
"While international performance has been below our plan, we believe our market share continues to grow as we outpace our competition in both international marketplaces," he said in the company's earnings release.
On a constant-currency basis, same-store sales grew 3.9%, including 4.1% domestic growth and 1.6% international growth.
Same-store do-it-yourself traffic fell 3.6% in the quarter, but average DIY ticket rose 5.6% largely due to inflation of over 7%.
Last year, President Trump imposed a 25% tariff on imported cars and auto parts, which has led to gains for AutoZone's top line. Most car repairs are critical, meaning consumers don't have the option to delay purchases because of higher prices.
"Most of it's break-fix and you've got maintenance that has to be done. Consumers can defer it for some period of time, but if they do that then they have a larger failure which costs more money," said Daniele.
He said he expected inflation to continue in coming quarters but to become more muted as the industry laps the tariff-fueled price hikes from last year.
For the third quarter, the auto-parts retailer posted net income of $641.5 million, or $38.07 a share, compared with $608.4 million, or $35.36 a share, the year prior. Analysts polled by FactSet expected $36.22 a share.
Sales rose to $4.84 billion from $4.46 billion the year before. Wall Street expected $4.86 billion.
Write to Nicholas G. Miller at nicholas.miller@wsj.com
(END) Dow Jones Newswires
May 26, 2026 12:34 ET (16:34 GMT)
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