Not working for AZ, but I'm guessing it's a regional thing. AZ has around 6k stores, moving that much inventory and taking that many markdowns at once is a logistics and paperwork (especially at the end of a fiscal year) nightmare, so they're probably doing it by region to ease the pain.
Retailers often sell discontinued product below cost to move it faster. Margins on oil are pretty thin to begin with. They need to get it out faster to have shelf and backroom space for the new stuff.