Why Advance Auto Parts Shares Are Rising Today

Advance Auto Parts Inc. AAP reported fourth-quarter revenues of $2.465 billion, almost in line with the Wall Street view of $2.464 billion.

Comparable store sales for the fourth quarter of 2023 decreased by 1.4%. The company reported a quarterly EPS loss of $(0.59), while the analyst consensus pegs at $0.23.

Advance Auto’s gross profit decreased 11.9% from the prior year’s fourth quarter to $950.8 million. Gross margin was 38.6% versus 43.6% a year ago.

This result reflects both business performance and atypical drivers, primarily attributable to a change in inventory related items and elevated supply chain costs.

Advance Auto’s fourth-quarter operating loss was $(48.6) million compared with $119.3 million in the year-ago period. The company’s effective tax rate in the fourth quarter of 2023 was 42.3%.

Net cash provided by operating activities was $0.3 billion for the full year 2023 versus $0.7 billion for the prior year. The decrease was primarily driven by lower net income and working capital. 

“Our full year results are well below our expectations, and we are focused on instilling greater discipline and accountability both in the fundamental business and in how the organization executes across the board,” said Shane O’Kelly, president and chief executive officer. 

“Building on the $150 million in annualized SG&A reductions our team executed in the fourth quarter, we recently launched an initiative to eliminate costs related to our indirect spend by an additional $50 million on an annualized basis,” O’Kelly added.

Outlook: Advance Auto sees 2024 diluted EPS of $3.75-$4.25 versus the $3.57 estimate. The company sees net sales of $11.3 billion-$11.4 billion versus $11.46 billion estimate.

Price Action: AAP shares are trading higher by 2.27% to $66.22 on the last check Wednesday. 

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