AutoZone shifts focus to U.S. and Mexico distribution network for fiscal 2027
AutoZone said it will concentrate its growth on the U.S. and Mexico while slowing Brazil expansion, aiming to complete its domestic distribution upgrades by fiscal year 2027, according to CEO Philip Daniele’s Sept. 22 earnings call. The retailer plans to spend about $1.5 billion in capital expenditures this year, mainly on store growth and its hub and mega hub network.
AutoZone reported that its U.S. distribution center expansion is finished, comprising two new distribution facilities and two direct import facilities.
The company operates 172 mega hub stores and intends to open more than 40 additional mega hubs in fiscal year 2027, building toward a goal of 300 mega hubs over the next three years.
Jamere Jackson, CFO of Customer Satisfaction, noted that roughly 2,000 commercial programs linked to the mega hub network generate 16% higher annual sales than other programs.
In Mexico, AutoZone has opened an expanded distribution center in Monterrey that is now double its previous size and has broken ground on another planned facility there.
“There are approximately 2,000 commercial programs that are linked to a mega hub network. These programs sell 16% more annually than the balance of the commercial programs in the chain,” Jamere Jackson, CFO of Customer Satisfaction said.
“We opened our new expanded Monterrey, Mexico, distribution center and broke ground on another planned DC in Mexico,” Philip Daniele, President and CEO said.
AutoZone’s supply chain investments began in 2020 and are now in the final stages of completion. Previously, the retailer had aimed to operate 200 hubs in 2024 before raising its target to 300 mega hubs.
What we know
AutoZone is focusing on its domestic market for fiscal year 2027, slowing the pace of its Brazil expansion to concentrate on the U.S. and Mexico, President and CEO Philip Daniele said during a Sept. 22 earnings call.
This year, AutoZone invested about $1.5 billion in CapEx primarily placed toward store growth and hubs and mega hubs, Daniele said.
In 2024, for instance, the retailer targeted 200 hubs but is now working toward its goal of operating 300 mega hubs over the next three years.
In total, the retailer operates 172 mega hub stores.
These programs sell 16% more annually than the balance of the commercial programs in the chain.