AutoZone at 49th Annual Automotive Symposium: Strategic Growth and Inflation Management

On Tuesday, 04 November 2025, AutoZone (NYSE:AZO) presented at the 49th Annual Automotive Symposium, offering insights into its strategic initiatives amid current economic challenges. The company highlighted its efforts to manage inflation through disciplined pricing and sourcing strategies, while also outlining growth plans in the commercial sector and expansion in Mexico. Despite economic volatility, AutoZone remains optimistic about future growth, leveraging its in-store expertise to combat online competition.

Key Takeaways

• AutoZone is focusing on growth in the commercial segment and expanding its presence in Mexico.
• The company is effectively managing inflation through strategic pricing, maintaining profit margins.
• Online competition is addressed by integrating digital and in-store services.
• AutoZone is diversifying its sourcing to reduce reliance on China.
• The average vehicle age is increasing, boosting demand for maintenance and repair services.

Consumer and Market Trends

AutoZone noted that consumers are maintaining their vehicles longer due to high new and used car prices, with the average vehicle age now at 12.8 years. Despite broader economic volatility, consumer behavior remains stable, supported by a strong car parc and aging vehicle fleet. The company benefits from inflation, which allows for retail price increases while maintaining margins.

Strategic Initiatives and Growth

AutoZone is prioritizing growth in its commercial business, which now represents approximately 33% of the U.S. mix, up from 19-20% five years ago. The company is expanding its mega hub network to improve parts availability and service levels, with a target of around 300 mega hubs at full build-out. In Mexico, AutoZone aims to potentially double the size of its chain within a decade. The company is also focusing on integrating its online presence with in-store expertise to provide reliable advice to customers.

Sourcing and Supply Chain

To manage supply chain risks, AutoZone is diversifying its sourcing, reducing reliance on China for direct imports from 85-90% to approximately 60%, with plans to reach a 50% range. The company is working with suppliers to offset deflation and maintain margins through strategic pricing.

Inflation and Pricing

AutoZone expects inflation to continue rising over the next few quarters but remains confident in managing it through disciplined pricing strategies. The company is focused on maintaining its gross margin and acknowledges the rapid increase in retail prices across the industry.

Q&A Highlights

During the Q&A session, AutoZone addressed the impact of tax refunds, which historically boost spring sales, with larger refund checks anticipated next year. The mega hub strategy is reaccelerating Do-It-For-Me transactions, and the company is optimizing these hubs to push more inventory and strengthen markets.

Readers are encouraged to refer to the full transcript for a more detailed account of the conference call.

Full transcript - 49th Annual Automotive Symposium:

Unidentified speaker: Could not be any happier to have AutoZone here for, well, certainly for 18 straight years, because that’s all I know, but certainly a ton of the 49 years we’ve had. Jamere Jackson, the company CFO is here, as is Brian Campbell, company’s Director of Investor Relations. AutoZone has 154 million shares. Wait, no, I’m getting that wrong. That was the number of shares they had in 1998. AutoZone has bought back itself many times over. It says 16.7 million shares trading around $3,700. $64 billion equity cap, $8.5 billion of net debt, just under $73 billion total enterprise value. Talk about cash flow and talk about the ability to generate shareholder returns. This company and maybe a couple of others have very few peers. So thrilled to have some Q&A with Jamere and to get in the zone.

So I think one of the things that we have talked about over the course of the last couple of days is the consumer and some strain. I think as a largely DIY driven retailer and distributor, maybe you could help out more than anyone else. So, you know, what are you all seeing on the front lines with the consumer and various cohorts of income?

Unidentified speaker, AutoZone: Yeah, candidly, not a lot of change from where we were even a year ago. What I’ve seen with the consumer sort of in our DIY business is that the consumer is still looking at a situation from a macro standpoint where new car prices are high. The average new car price is over $50,000. The average monthly payment is over $700 a month, used car prices are high. You know, the average used car price on a monthly payment basis is over $500. So consumers are continuing to hunker down and take care of the vehicles that they’re, that they’re already in. You know, a year ago we were seeing probably more pressure in the discretionary categories. You know, the last couple of quarters we’ve actually seen a little bit of growth in those discretionary categories.

So, you know, I would say that the situation with the consumer has not changed a lot in the last year. I will say there’s a lot more volatility and uncertainty in the marketplace and that from time to time does impact sort of consumer behavior. There’s lots of talk about what’s happening with the low end consumer. I think that narrative’s been in the marketplace for a little over a year or so. We haven’t seen the low end consumer get any worse than they were a year ago. So I think for us, and really for our industry, we’ve sort of powered our way through it and been able to deliver. The other thing I’ll say about the consumer is that you’ve seen on a macro basis numbers like the unemployment numbers ticking up a little bit. We’re now up closer to 4.3%.

That’s still very good, and if you look at that in combination with where average wages are, the consumer is still hanging in there, if you will, but the volatility and uncertainty does from time to time cause consumers to pause, but the macro factors in our industry are very strong, with a growing car parc and aging car parc and a consumer that’s, you know, been pretty resilient through it all.

Unidentified speaker: As you are, you’re thinking about this and you have, you know, you have not seen the deterioration of the consumer yet, but clearly there, there’s enough in the way of tea leaves that you could be seeing it. Have you seen anything as it relates to mix some good, better, best choices changing and how does that factor into your own inventory and sourcing planning?

Unidentified speaker, AutoZone: Yeah, you know, we haven’t seen a lot of trade-downs which, you know, typically when things get tight from a consumer standpoint, you’ll see some trade-down in the, in terms of the good, better, best stack. We haven’t experienced that, you know, as we’ve moved into this fiscal year and even in the tail end of last fiscal year, and what I’ll, what I’ll also say is that because, you know, consumers are hanging onto their vehicles a little bit longer. I mean, the average age of vehicle on the road now is I think, 12.8 years. It’s ticked up a little bit every single year for the last five or six years because consumers are anticipating having to hang on to those, those vehicles a little bit longer.

We actually saw in some, in certain categories where consumers were actually trading up because they realized they’re going to be on the, be in the vehicle a little bit longer, they’re probably not going to buy a new new vehicle or used vehicle, and that, that obviously bodes well for us as a, as a business.

Unidentified speaker: Sure. You know, we’ve talked a lot about inflation over the course of the last day and a half. This has been an area where you have excelled over time. Your ability to not only deal with costs but pass that along to consumers in an appropriate manner. Talk about the decisions that take place at AutoZone regarding pricing and your ability to not only in an inflationary environment, maintain gross profit dollars, but also gross margin, which is obviously accretive to EPS.

Unidentified speaker, AutoZone: Yeah, I mean, you know, we, we continue to benefit from the fact that we’re largely a break-fix business. I mean, 85% of our, our, our mix, if you will, is in, you know, sort of failure and maintenance categories where if you’re going to keep a vehicle in operation and be on the road, you’re going to have to maintain that vehicle and fix those things that, that ultimately fail. So if you, if, if you’re operating sort of in that, that environment, you have an opportunity to be very disciplined from a pricing standpoint. And we’ve done that and certainly our entire industry has done that over time.

So you know, what we’ve, what we’ve seen is that, you know, those categories, you know, in the failure and maintenance categories, you know, basically are relatively inelastic, if you will, and we’re, we see some movement typically is around the discretionary categories and most of that is sort of basket related as opposed to the consumer saying, I’m not going to go get certain things. So we benefit from being in a business and having a business model and selling a set of products that are relatively maintain our gross margins as we move through. We do that with discipline and you know, we want to make sure that we’re taking care of the consumer.

But at the end of the day, you know, given this, given this model and the relative inelasticity, you know, I’ve, I’ve said at different points in time that, you know, inflation tends to be our friend, some retail inflation that gives us an opportunity to raise retails, maintain our margins and over and overall create more gross profit dollars inside the business.

Unidentified speaker: You’re unique in so many different ways, but one of it is just your reach. Can you talk maybe regionally about what you’ve seen? Any differences geographically from a top line perspective?

Unidentified speaker, AutoZone: There are always nuances within the regions. Obviously in places like the Rust Belt, we want to make sure that we get the kind of weather that is going to generate failures for us so that ultimately we can keep that portion of the business humming right along. So what I’ll say is that regionally they’re always, you know, nuances, whether it’s weather or regional dynamics in terms of economies, et cetera. But what I’ll say overall is that when we look across the country, particularly in the U.S. things are performing about as we, as we would have expected.

Unidentified speaker: And just to remind us, you mentioned weather that ends up kind of over time evening out. You’re comping against an easy winter a year ago, I would imagine.

Unidentified speaker, AutoZone: Yeah, I mean, you know, a year ago we did have, you know, some weather in the, you know, kind of October timeframe that, you know, makes the comps a little bit easier for us. But you know, overall, I would say last year’s winter, when we look at it in totality, was about average. And you know, we were anticipating to have a sort of a good winter this year. And you know, I just remind people that we like really bad winters. We like cold and ice. And I like when my friends in Texas call me and say that it’s freezing here, my pipes are breaking and my car won’t start and all of those kinds of things.

So we like really cold, nasty winters and we like really hot summers because those things generate failures and we get an opportunity to sell a lot of parts in that environment.

Unidentified speaker: Yeah, you guys too. My kids stay home way too much when that happens, so that’s for sure. So. So if we are kind of thinking about your organization and some of your strategic initiatives, maybe talk about a couple of the areas that you’re wanting to either grow or to embed yourself even further with your customers.

Unidentified speaker, AutoZone: Yeah, well, clearly we’ve been focused on accelerating the growth in the commercial portion of our business and we’ve done a pretty good job of that. In fact, this last quarter it was about a third of our mix on the U.S. side. Five years ago, that number was close to 19% or 20%. We’ve continued to invest in a disciplined way in making sure that we jam more parts in a local market closer to the customer and grow our market share. You know, right now we’re probably a 5% share in a market on the commercial side of the business that’s approaching, you know, $100 billion or so. There’s a tremendous opportunity for us. You know, we started our business as DIY and DIY only.

We made our foray and the commercial, you know, candidly, we had some fits and starts probably 20 years or so ago, but we’ve committed to that business. It’s over a $5 billion run rate and grown very nicely the last couple of quarters. So we’ve invested in a meaningful way in adding more inventory. We’re building hubs and mega hubs. Our mega hubs in particular have been a real boost to our business. You know, those mega hubs carry close to 100,000 SKUs where a typical satellite store is closer to 30,000. That incremental inventory in a local market enables us to stock slower turning parts, if you will. That’s been a big piece of our strategy. We’ve invested in our Duralast brand. We’re using our hubs and mega hubs to do more direct deliveries as opposed to just having them fulfill the satellite store.

So our service levels are improving. And then the last thing I’ll say is that, you know, we’ve spent a lot of time making sure that we put a professional sales force in the field to go drive sales and that’s been a meaningful lift to our business. So, you know, commercial has been our, one of our top growth priorities inside the company and, and the teams are executing very, very well and we’re really excited about the opportunities that we have going forward.

Unidentified speaker: After a relatively small incubator, or after an incubator for some time, you’ve really expanded quite a bit in Mexico. Can you talk about that initiative, the market there, and kind of how that’s progressing relative to expectations?

Unidentified speaker, AutoZone: Yeah, we’re really excited about the growth opportunities in Mexico. You know, we have a little under 900 stores there. You know, we actually think we can, you know, probably double the size of that chain within the next decade or so competitively. You know, if you look at our outlet share versus the next four or five competitors and when we have more outlets than the next four or five competitors combined, the product offering that we have and the service offering that we have is far superior to what we see from our near end competitors there. So the combination of the size and the scale and the offerings that we have, you know, really given us a great business there. We like that business. It’s, you know, it’s a, it’s a vehicle population that’s quite a bit older than the population in the U.S.

which is, you know, creates a nice tailwind for us. You know, if you look at the P and L dynamics, we get very good gross margins. There’s, the productivity per store is on par with what we see in the U.S. and we also have a, you know, the cost of labor there obviously is a lot cheaper. So we like the earnings capabilities and the returns that we’re generating in that, in that market. You know, if there’s one thing Brian and I talk about this a lot, there’s one thing that we wish we had done a lot sooner, which was we wish we had built out stores in Mexico a lot sooner and a lot faster than we did in the past. But we’re certainly accelerating that as we.

Unidentified speaker: Moving forward, is staying with Mexico on a different wavelength. Trade and your sourcing. Maybe talk about initiatives over the course of the last year that you’ve had to undertake just because of various dynamics as it relates.

Unidentified speaker, AutoZone: Having the discussions that we’ve all had over the last year around tariffs, we’ve been really focused on diversifying our sourcing capabilities outside of Asia and, you know, and particularly outside of China. You know, we’ve had volume that we’ve moved to places like Turkey and we’ve moved some to places like India and all of those things were to diversify our sourcing base, if you will. Still, the overwhelming majority inside the industry does come out of China, but we’ve done a nice job. If I look at our direct import business, where we were direct importing closer to 85% or 90% out of China a few years ago, that number’s down closer to 60% today. And it’s going to have a five handle on it based on the plans that we have in place.

That’s been important, but that being the case, I mean, you can’t necessarily run from what’s going on in the macro, particularly as it relates to tariffs, so we’ve had a strategy that said one where there are opportunities for us to diversify. The second piece of that has been to make sure that we’re working with our suppliers and where there are opportunities to have deflation offset some of the tariff impacts, we’ve pushed really hard, and that’s about being disciplined for the consumer. And then obviously, to the extent that those tariffs create an inflationary environment for us, then, you know, we’re going to raise retails accordingly and net net, at the end of the day, maintain our margin structures, and this is not our first rodeo.

We, you know, dealt with this in 2017-ish kind of timeframe and navigated that environment very well, and the teams are doing a great.

Unidentified speaker: So now taking a smaller, big enough pivot as the retailer with the highest DIY concentration online penetration in the aftermarket would impact you the most. What have you seen, if anything, that’s measurable from online competition interfering with your business, or how have you grown your own online structure to better compete there?

Unidentified speaker, AutoZone: Yeah, I mean, overall, it’s still a relatively nascent portion of the business from a DIY standpoint. Although what I will tell you is that consumer behaviors are changing. And what we’re seeing more so than anything else is that a lot of our customers, even the ones that come into the store to do a DIY purchase or starting that journey online, so they’re looking up parts online and they’re figuring out the kinds of things that they need. They may be, you know, price shopping or comparing, but the one element that is a competitive advantage for us relative to the pure play players is that those customers still want to come in and get trustworthy advice inside a store.

So they come into an AutoZone, maybe they’ve started their journey online, but they want to come in and get advice from an AutoZoner about, you know, the part. Do I have the right part? Is it the right fitment? Can you go grab it out of the back and can I compare it? And in many instances, you know, depending on what the job is, I mean, we actually do installations at a store where we’ll go out on a courtesy basis and go out to the customer’s car and do the installation. And that’s just something that you can’t replicate online. What we’ve done over time though is we’ve continued to add assortment online and you know, we have assortment that in our stores, but we also have some that, you know, is only available online and we think that’s going to continue as we move forward.

So we’ve, we’ve navigated the environment very well. You know, we continue to build assortment and build our online presence. We recognize the changes in sort of consumer behavior and we’re still benefiting from the fact that we provide trustworthy advice and that, you know, customers still like to come into the store and get that trustworthy advice from an AutoZoner as they’re working to complete a job.

Unidentified speaker: Going to. Oh, go ahead, Michael.

Unidentified speaker, AutoZone: Jamere and Brian.

Michael Astor: Michael Astor, good to see you. On the topic of inflation and tariffs, there’s a debate within the industry about the degree to which and the timing of which this is going to peak. What is your view on that and the degree to which this peaks as a sales driver for the industry? What’s on the other side of it? Does the industry go back to historic growth rates? Does it trough for a period of time? How does that look in the mind of AutoZone? Thank you.

Unidentified speaker, AutoZone: Yeah, great question, Michael. What we’re seeing today is that we’re still in sort of the early innings from an inflation standpoint. You know, the first round of tariff announcements. Quite frankly, as I talked a little bit earlier, there were lots of things that we and others were doing to basically mitigate tariffs, including the fact that we’d all been working with suppliers to say, you know, how do we offset this? How much of this are suppliers and our vendors going to eat before we get to the next leg, which is, you know, how much do we need to absorb in terms of costs and pricing. So, you know, when we first talked about, you know, tariffs on, you know, in our public earnings calls, the first quarter that we talked about it, it was, you know, pretty minimal and immaterial.

Next quarter we saw a little bit more. We’re going to continue to see that number tick up for the next few quarters or so. I think what’s been confusing for some folks is that, you know, this didn’t all, you know, the inflation didn’t all come as a big bang. Sort of the way we saw it during the pandemic where freight hit us and all of a sudden we’re taking, you know, eight, nine, 10%, you know, ticket averages going up right away. What we’re seeing here is it’s, it’s, it’s coming in as we’re bringing the inventory in, as that inventory is turning. We’re seeing it come a little bit slower than what we’ve, what we saw when we saw hyperinflation with, you know, freight and other things during the pandemic.

But to be clear, it is coming and it is going to accelerate, you know, this quarter and probably for the next couple of quarters. I think on the backside of that, what, what we’ve experienced in this industry is typically when we see hyperinflation and then, you know, you see sort of some deflation that comes behind that. We don’t take retails down, so there’s an opportunity for us to actually expand margins when we start to see deflation. And then, you know, in terms of what happens to retails from that point forward, you know, depending on what we see in terms of cost and cost increases, we would expect to, you know, things that go back to kind of the normal industry averages, if you will, from an inflation standpoint. And, you know, that’s sort of the way that we’re planning it.

But, you know, it is, it is clear that more inflation is coming, and it’s, it’s going to come in the next couple of quarters or so. I can tell you on the ground that, you know, as we, as we’re in the market and we’re, we’re, we’re operating both on the DIY and the commercial side. You know, we’re seeing retail prices go up and they’re, in many instances, they’re going up pretty fast and furious. It’s not just sort of the large public competitors, but the warehouse distributors are doing it as well. I mean, you know, we’re all seeing the same sort of, you know, cost pressures, if you will. In total and we’re all having to raise retails accordingly.

Bret: So, Jamere. Yeah, when you think about this, Jamere, it’s Bret back here. But when you think about the industry this year, and obviously you’re getting a lot of price contribution that maybe wasn’t expected prior to April. As you close out 25, what do you think the annual industry growth rate would have been and what would have been the unit contribution? Are we really sort of pushing units into 26 as a result of what we’re doing in pricing in 25?

Unidentified speaker, AutoZone: Yeah, I think a couple dynamics are happening. One is obviously from an inflation standpoint, you know, the comps are moving higher and that’s driven by ticket average. What we’re all watching is to see whether or not there are any wobbles from units or an elasticity standpoint or foot traffic standpoint. What I’ll say is that at least in the near term, here again, this is more the characteristics of the industry than anything else. Is that for the lion’s share of the business that’s break fix related, we’re not seeing a drop off in units. You wouldn’t expect that given the nature of the products that we sell. Now, we’re not totally immune to those dynamics that you see in the macro when consumers see a lot of inflation coming at them.

But what we saw during the pandemic and what we’ve seen historically is that when the consumer looks at their wallet and they’re thinking about mobility being a priority to get to work, to get to school, to move around, that other discretionary portions of retail tend to take a bigger hit than we do in our industry. So we’re watching it. So far we haven’t seen a drop off there. And when we do see drop offs, it’s usually things like people are trading down the good, better, best stack or if they have an opportunity to defer, they will. What I’ll say about deferrals is that we just came out of a deferral cycle, if you will.

And you know where we saw that most pronounced particularly was in the tire verticals, where, you know, our friends and our customers in the tire vertical had a really tough time because all of big ticket was under pressure. And if you know a set of tires can cost you north of $1,000 and that was considered a big ticket. So if a consumer could push that to the right, they would. Or if they get two tires instead of four, they did. And if you don’t take the tires off, then you don’t get to, you know, the claptrap that we sell brakes and rotors and calipers and that sort of stuff. So we’re not seeing that here in the early innings, but it is something that we’re watching.

Unidentified speaker: There’s one. Okay.

Max Reclinko: Hey guys, thanks a lot. Max Reclinko. So excluding price, you guys have seen a really nice inflection in DIFM transactions the past couple of quarters. I think that sort of coincided with a reacceleration in mega hub openings. So maybe just talk about sort of your mega hub strategy. The next couple of years seems like 2026 is going to have more than 2025. So what’s the pace of openings and then just opportunities to better optimize the mega hubs just to push more inventory and make all the markets stronger.

Unidentified speaker, AutoZone: Yeah, I’d say, you know, very broadly speaking, we’re winning share, we’re winning share with national accounts and also the smaller up and down the street players. A big key to that is having more. We have a plan that we’ve laid out that says we’ll get close to 300 mega hubs at full build out. And you know, candidly, it’s likely to go higher than that just based on the success that we’re having with the strategy, what we’re seeing in terms of cannibalization and more importantly, you know, what it means to have those parts in the local market lifting the entire network. So we’re excited about that piece of the strategy. It’s important for us to make sure that we’ve got that inventory and that inventory is efficient.

I get the questions a lot about why the big box formats and the very simple answer is that we’ve seen a lot of parts proliferation in this industry. And so the trick has been what do you forward place in a satellite versus a hub versus a mega hub versus at a distribution center. And increasingly we’re getting a lot of products that are shipped direct from the vendor, either to the store or direct to the customer. So, you know, having that algorithm, right, making sure that you got the right parts in a local market close to the customer is really, really important in terms of winning in the marketplace. And we’re doing a good job of that. And we’ve got a lot of potential in front of us as well. Greg.

Greg Malik, Analyst, Evercore: Hi, Greg Malik with Evercore. I guess I had two questions. One, do you just remind us tax refunds what that’s done historically and if you’d expect to see that next year with the big beautiful tax refunds. If there would be any reason that you wouldn’t see that normal propensity to fix your car with those checks. And then second is immigration. Do you think the lack of flow this year has had any impact on demand or the increased deportations?

Unidentified speaker, AutoZone: Yeah. So, you know, the first one on tax refunds, you know, obviously our spring selling season sort of coincides with tax refunds. And, you know, we call that our super bowl or our Christmas, if you will, inside the business. And, you know, we see a meaningful lift in our business during that time frame. You know, based on, you know, what we’re hearing, at least in the early innings, there’s a potential for the refund checks to be a little bit larger. And so, you know, we would expect that to have some impact on our business. But what I also say is that, you know, as we get closer to that timeframe, we have a much better view.

Tax refund season can be a little bit nuanced for retailers, and our business is no different in that regard, in that if the weather’s nice and it’s warm, people get out, they spend money, particularly discretionary money, then, you know, we see a nice lift associated with that. If the weather’s not great during that time frame and, you know, you miss. Sometimes you miss those purchase occasions altogether. The one thing that always does that we can always count on, that sort of underpins our selling season is that, you know, starts spring break and when people are traveling a little bit more. And it also coincides with when people go and buy a lot of used cars. And so those used cars are being refurbished during that time. Those used car dealers are buying a lot of parts from us.

And then the customers sometimes after they buy those cars, they that we sell as well. So, you know, those are kind of the dynamics during that timeframe. You know, we want to make sure that the flows happen, and we also want to make sure that the weather’s good and the consumer’s feeling good about taking that check and spending it. But it’s been pretty consistent and steady, with the exception of sometimes the weather doesn’t always cooperate during that time frame. And then on immigration and deportations, what I’ll say is we haven’t seen anything material when we look broadly across the U.S. but there are pockets clearly where to the extent that there are National Guard troops on the ground or a big media cycle around deportations, you do see a little bit of a hibernation.

And then once that cools off, people come back out and it’s sort of business as usual. So what I’ll say is that, you know, it’s been a little bit more temporary and transient than it has been sort of a long lasting impact, if you will.

Unidentified speaker: Jamere and Brian, unfortunately, we run out of time. Thank you very much again for taking time out. A very busy week to come here. And the Q and A was great. Really appreciate.

Unidentified speaker, AutoZone: It’s good to see you guys soon.

Unidentified speaker: So we’ve got about 15 minutes to get lunch and get situated before Melinda. I would love to have it as quiet as possible for when she begins. So please do what you can. And we’ll see in 15 minutes. Thank you. Take care of.

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