AutoZone Shares Plunge Over 10% Despite Beating Estimates on International Weakness and Margin Concerns
AutoZone Inc. stock was on track Tuesday for its worst trading day in more than six years, falling more than 10% during intraday trading despite the retailer surpassing Wall Street’s fiscal third-quarter expectations. The decline puts the stock on pace for its first double-digit daily drop since the onset of the Covid pandemic in March 2020.
Quarterly Results and Analyst Concerns
For the fiscal quarter ended May 9, AutoZone reported earnings per share of $38.07, exceeding the average analyst estimate of $36.28 compiled by LSEG. Revenue came in at $4.84 billion, roughly in line with the LSEG consensus of $4.83 billion.
On the company’s quarterly earnings call Tuesday, analysts raised concerns over lackluster international growth and margin compression that increasingly mirrors competitors. They also questioned slowing year-over-year sales, attributing the trend to cooler weather conditions as well as pullbacks in consumer spending.
“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,” AutoZone Chief Executive Philip Daniele said Tuesday.
Inflation, Energy Costs, and Supply Chain Risks
Wall Street analysts pressed executives on continued headwinds from inflation, rising energy costs, and potential supply chain disruptions linked to the war in Iran, particularly possible shortages of motor oil. AutoZone executives projected that inflationary pressures would persist but be “slightly muted” due to year-over-year comparisons.
Regarding lubricant supplies, Daniele downplayed the risk of material impact despite reports that dealer operations at Toyota Motor Corp. and Nissan Motor Co. are being affected. “The issue around lubricants, I know there’s a lot of noise out there. We’re going to leave that up to the oil specialists to really say what that means. We think there’s probably going to be some constraints, but we don’t think that it’s going to be that material,” he said.
Automotive website The Drive reported that both Nissan and Toyota have recently issued service bulletins to dealers with instructions on rationing motor oil stocks due to an impending shortage. A Toyota spokesman said the company has “nothing more to add on this issue at this time.” A Nissan spokeswoman stated the automaker “is navigating supplier constraints affecting lubricant availability.” She added in an emailed statement: “Currently, we are maintaining current pricing and have implemented temporary allocation measures to help ensure consistent supply across our dealer network. We’re also working with supplier partners to identify additional sourcing. Our priority remains supporting our dealers to ensure an exceptional customer experience.”
Market Context
- United States dollar: 71.67 Russian rubles (change: +0.12)
- Euro: 83.30 Russian rubles (change: -2.15)
- Bitcoin: $75,755 (24-hour change: -2.2%)
- Oil: approximately $72 per barrel (estimated)