Segment Reporting

12 Months Ended

Aug. 26, 2023

Segment Reporting

Segment Reporting

Note P – Segment Reporting

The Company’s primary operating segments (Domestic Auto Parts, Mexico and Brazil) are aggregated as one reportable segment: Auto Parts Stores. The criteria the Company used to identify the reportable segment are primarily the nature of the products the Company sells and the operating results that are regularly reviewed by the Company’s chief operating decision maker to make decisions about the resources to be allocated to the business units and to assess performance. The accounting policies of the Company’s reportable segment are the same as those described in “Note A – Significant Accounting Policies.”

The Auto Parts Stores segment is the leading retailer and distributor of automotive parts and accessories through the Company’s 7,140 stores in the U.S., Mexico and Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.

The Other category reflects business activities of two operating segments that are not separately reportable due to the materiality of these operating segments. The operating segments include ALLDATA, which produces, sells and maintains diagnostic, repair, collision and shop management software used in the automotive repair industry and E-commerce, which includes direct sales to customers through www.autozone.com for sales that are not fulfilled by local stores.

The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is defined as gross profit. The following table shows segment results for the following fiscal years:

	Year Ended
	August 26,		August 27,		August 28,
(in thousands)	2023		2022		2021
Net Sales
Auto Parts Stores	$	17,145,137	$	15,963,196	$	14,381,712
Other		312,072		289,034		247,873
Total	$	17,457,209	$	16,252,230	$	14,629,585
Segment Profit
Auto Parts Stores	$	8,885,403	$	8,301,234	$	7,556,889
Other		185,019		171,416		160,896
Gross profit		9,070,422		8,472,650		7,717,785
Operating, selling, general and administrative expenses		(5,596,436)		(5,201,921)		(4,773,258)
Interest expense, net		(306,372)		(191,638)		(195,337)
Income before income taxes	$	3,167,614	$	3,079,091	$	2,749,190
Segment Assets:
Auto Parts Stores	$	15,664,891	$	15,060,704	$	14,398,581
Other		320,987		214,339		117,618
Total	$	15,985,878	$	15,275,043	$	14,516,199
Capital Expenditures:
Auto Parts Stores	$	775,601	$	650,495	$	602,329
Other		21,056		21,896		19,438
Total	$	796,657	$	672,391	$	621,767
Auto Parts Stores Sales by Product Grouping:
Failure	$	8,407,690	$	7,801,155	$	7,048,700
Maintenance items		6,223,620		5,670,278		4,888,763
Discretionary		2,513,827		2,491,763		2,444,249
Auto Parts Stores net sales	$	17,145,137	$	15,963,196	$	14,381,712

The following table presents the Company’s net sales disaggregated by geographical area:

	Year Ended
	August 26,		August 27,		August 28,
	2023		2022		2021
United States	89	%	92	%	93	%
Mexico	10	%	8	%	7	%
Brazil and all other	1	%	—	%	—	%
Total	100	%	100	%	100	%

The Company’s long-lived assets, consisting primarily of property and equipment, net and operating lease right-of-use assets, within the United States were 88%, 91% and 92% in fiscal years 2023, 2022 and 2021, respectively. No individual country outside of the United States had long-lived assets that were material to the consolidated totals.