AutoZone faces risks from fluctuating product demand (affected by fuel prices, miles driven, economic conditions, and weather), competition from other retailers and online marketplaces, difficulty in managing inventory and costs, and sustaining historical growth rates. International operations present currency fluctuations, regulatory complexities, and supply chain disruptions. Credit rating downgrades and macroeconomic instability could hinder access to financing and increase borrowing costs. Litigation and cybersecurity threats pose potential liabilities. Self-insurance reserves are subject to estimation uncertainties.
Financial Upside
AutoZone's net sales increased 5.9% in fiscal 2024, driven by new store openings, commercial sales growth, and a 53rd week. Gross profit margin improved slightly. The company repurchased shares, and has significant remaining authorization for future repurchases. Favorable cash flow from operations and available credit lines provide liquidity for future investments and share repurchases. The company's expansion into international markets offers potential for further growth.
