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Advance Auto Parts 1Q Earnings Fall — Earnings Review

By DeanSeal

Advance Auto Parts logged a slimmer profit and lower-than-expected sales for the first quarter. Here’s what you need to know.

PROFIT: The automotive parts seller posted a profit of $42.7 million, or 72 cents a share, compared with $139.8 million, or $2.26 a share, in the same quarter a year ago. Analysts polled by FactSet had been expecting earnings of $2.56 a share.

REVENUE: Quarterly sales rose 1.3% to $3.42 billion, below analyst forecasts for $3.43 billion, according to FactSet.


OPERATING MARGIN: The company’s operating margin for the quarter was 2.6%, which was well below its expectations, according to Chief Executive Tom Greco. The miss was due to higher-than-planned investments aimed at narrowing competitive price gaps in the progressional sales channel, along with an unfavorable product mix.

GROSS MARGIN: Gross margin fell to 43% of net sales due to inflationary product costs that weren’t fully covered by higher prices, as well as unfavorable product mix and supply chain headwinds.

COMPARABLE SALES: Comparable sales, which strip out the effects of store openings and closings, were down by 0.4%. The company’s 1.3% top line growth was driven by new store openings.

GUIDANCE: Anticipating that headwinds in the first quarter would persist, the company is lowering its full-year guidance. It now expects sales of $11.2 million to $11.3 million, compared with its prior forecast for $11.4 million to $11.6 million. Earnings are now forecast to be $6 to $6.50 a share, instead of $10.20 to $11.20 a share as previously projected.

SHARES: Shares sank 24% to $85.21 in premarket trading Wednesday and are on track to open at a three-year low.

Write to Dean Seal at [email protected]

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