AutoZone’s Profit Margins Shrink, Company Remains Confident in Market-Share Growth

An analyst said the auto parts giant could benefit from U.S. tariffs on new cars and has limited exposure to Chinese supply chains.

An AutoZone store in Farmingdale, N.Y., on Sept. 15, 2022. Bruce Bennett/Getty Images

Shares of auto parts giant AutoZone Inc. fell on May 27 after the company reported higher fiscal third-quarter revenue and same-store sales, but a decline in profit margins. The company expressed confidence in future growth, noting its exposure to China has declined “significantly.”

According to its earnings report, the Memphis, Tennessee-based company’s gross profit as a percentage of sales was 52.7 percent in the third quarter of fiscal year 2025, which ended May 10. This represents a 77 basis-point decline from a year ago. The drop was driven by higher inventory shrinkage, increased commercial mix overhead, startup costs for a new distribution center, and higher operating expenses, company officials said.