AutoZone (NYSE:AZO) reported an 8.1% increase in second-quarter sales on Tuesday, as the company’s aggressive store expansion and inflation-driven pricing offset a dip in net income caused by technical accounting charges.
The Memphis-based auto parts retailer posted net sales of $4.3 billion for the 12-week period ended February 14, 2026.
Despite the top-line growth, net income fell to $468.9 million, down from $487.9 million in the prior-year period.
Diluted earnings per share followed suit, decreasing to $27.63 from $28.29.
The decline in profitability was primarily linked to a 137-basis-point drop in gross margin, which landed at 52.5%.
Management attributed nearly the entire decrease to a 138-basis-point non-cash LIFO (last-in, first-out) charge, a common accounting adjustment in inflationary environments.
Operating expenses remained relatively stable at 36.1% of sales, though they saw slight deleverage due to ongoing investments in growth initiatives.
Operating profit for the quarter edged down 1.2% to $698.5 million.
AutoZone also continued its long-standing strategy of aggressive capital return, repurchasing 85,000 shares of its common stock during the quarter for a total investment of $310.8 million.