F3Q26 Quick Take: Earnings Beat/ Core Comps Disappoint

研报英文原文证据摘录

F3Q26 Quick Take: Earnings Beat/ Core Comps Disappoint

htly below Street at +4.8%/EVR +4.5% estimate, with total company constant-currency comp

of 3.9% also light vs. the +4.5-5% setup. AZO is indicating down around 5% before the open at time of writing, reflecting the core

domestic shortfall —even as the underlying gross margin and EPS beat suggest the reinvestment cycle/LIFO pressures we have

been flagging are easing. Domestic commercial (DIFM) remained a bright spot at +10.4% YoY ($1.40B), with the Hyperdrive

program and tariff pass-through still fueling double-digit growth, even as it cycles +10.7% LY. Reported international comp of

+16.6% looks optically strong, but on a constant currency basis the comp was just +1.6%, with Mexico and Brazil performing

similarly to last quarter per management — i.e. ex-FX trends in the two key int'l markets remain under pressure with cumulative

inflation/macro headwinds lingering. Gross margin of 52.2% was down 57 bps YoY, but ~90 bps ahead of our 51.3%/ ~80 bps

ahead of Street's 51.4% — the LIFO impact was a 77 bp net non-cash headwind (partially offset by other GM improvements), better

than we had modeled and better than the aprox 100-140bps of pressure investors had been anticipating from LIFO. CFO Jamere

Jackson's prior call-out that merchandise margin benefits would help offset the rate headwind did prove prescient, we believe with

potential for further improvement from tariff rebate recapture. SG&A delivered 20 bps of leverage (33.1% vs. 33.3% LY) on strong

topline plus expense management, a notable inflection vs. the +9-10% SG&A growth pace running through 1H. EBIT of $923.8M

(+6.6%) ahead of Street's $877.7M and our $850.4M, with EBIT margin at 19.1% versus our 17.7% and Street's 18.1%. A/P-to-