Advance Auto Parts Q4: Sales Beat Expectations But Margins Slide, Stock Dips

Advance Auto Parts Inc. AAP shares traded lower in the premarket session on Wednesday.

The company reported fourth-quarter adjusted earnings per share of $1.18 loss, which is in line with the analyst consensus estimate. Quarterly sales of $2 billion (down 0.9% year over year) outpaced the street view of $1.93 billion.

Comparable store sales for the fourth quarter decreased 1.0%.

Adjusted fourth quarter gross profit was $778.6 million, compared with $819.6 million in the year-ago period. Adjusted gross margin in the quarter under review was 39%, lower than 40.7% in the year-ago period.

Adjusted fourth quarter 2024 operating loss was $99.4 million or (5.0)% of net sales, compared with a loss of $31.0 million or (1.5)% of net sales in the prior year quarter. Adjusted operating margin was negatively impacted by 280 basis points of atypical items and certain headwinds in the period.

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“We remain committed to delivering an improved operating performance in 2025 and making progress toward our FY27 goal of achieving an adjusted operating margin of approximately 7%,” said Shane O’Kelly, president and chief executive officer.

The company exited the quarter with cash and equivalents worth $1.869 billion.

Outlook: The company sees FY25 net sales of $8.40 billion-$8.60 billion versus $8.51 billion estimate. Comparable store sales are expected to rise in the range of 0.5% to 1.5%. Adjusted earnings per share are expected in the range of $1.50-$2.50 versus $1.56 estimate.

For the first quarter of FY25, the company projects net sales from continuing operations of approximately $2.50 billion. Comparable store sales are expected to decline by approximately 2%.

In the long term, the company aims to optimize its supply chain by consolidating distribution centers and opening 60 market hubs by mid-2027.

The company will also standardize store operations and improve labor productivity. Additionally, it plans to accelerate new store openings to drive growth.

For FY27, the company sees net sales of approximately $9.00 billion.

Price Action: AAP shares are trading lower by 3.23% to $44.40 premarket at last check Wednesday.

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