AutoZone's mega-hub buildout pushed sales up 8.4% as it refocuses on the US and Mexico

What was changed

AutoZone's supply chain rebuild began in 2020 and is now in its final stages. The company has completed its U.S. distribution center expansion — two new distribution facilities and two direct import facilities — and invested about $1.5 billion of CapEx this year, primarily for store growth and hubs and mega hubs. Management credits the supply chain work with an 8.4% year-over-year sales increase in the third quarter, and CEO Philip Daniele said the company completed 'the vast majority of the technology upgrades needed to accommodate a much more dynamic and global supply chain.'

The core of the model is the mega hub: stores carrying more than 100,000 SKUs, expanded-assortment sources for surrounding stores. In 2024 AutoZone targeted 200 hubs; the goal has since moved 'from 75 to 110, and ultimately to 300' over the next three years, CFO Jamere Jackson explained, because attaching a hub to a satellite network shows visible acceleration. The company opened 16 mega hubs in the quarter and 39 for the year, operates 172, and plans more than 40 in fiscal 2027. About 2,000 commercial programs linked to the network sell 16% more annually than the rest of the chain's.

Alongside the hub buildout, AutoZone refocused its footprint for fiscal 2027, slowing its Brazil expansion to concentrate on the U.S. and Mexico. The new Brazil distribution center is complete and already reducing supply chain costs; the Monterrey, Mexico distribution center has doubled in size, and the company broke ground on another planned DC in Mexico. Daniele said the expanded Mexico supply chain will let AutoZone serve customers better, reduce supply chain costs and better support international store growth.

Why it worked

Mega hubs concentrate inventory where sales respond: hubs carry 100,000+ SKUs, and the roughly 2,000 commercial programs they serve sell 16% more per year.

Target discipline followed evidence: the ratchet from 75 to 110 to 300 came from watching acceleration every time a hub was attached to a satellite network.

With the U.S. distribution expansion complete, capital shifts to what is proven — domestic hubs — while Brazil slows and is served by its finished DC.

What can be applied

Dense local inventory compounds: each mega hub attached to a satellite network accelerates sales, so keep raising the target while the dynamic proves out.

Aftermath

AutoZone expects to invest a similar amount of CapEx — about $1.5 billion — in fiscal 2027, opening more than 40 additional mega hubs on the way to the 300 goal. Rival Advance Auto Parts is running a parallel playbook, consolidating distribution and planning up to 20 market hub openings this year and 60 locations by mid-2027.