Auto parts/accessories retailer in slow gear in Q1

Advance Auto Parks turned in a disappointing performance in its first quarter.



The chain reported earnings of $1.46 per share, down from $2.16 per share in the year-ago period. Adjusted EPS was $1.60, far short of the $2.16 per share FactSet consensus.



Revenue fell 3% to $2.89 billion, down from $2.98 billion last year, and less than analysts had expected. Same-store sales fell 2.7%. The company attributed the decline in sales to the shift in the New Year's Day to the first, as well higher demand at the end of the fourth quarter because of winter weather in December that "pulled sales forward into the fourth quarter."



The retailer said its operating income decline was primarily driven by investments in the customer, expense deleverage due to the comparable store sales decline and inventory optimization efforts as outlined.



“As in the past several quarters, our operating margin reflects our deliberate choices to restore investments in the customer and improve overall service and delivery," said Tom Greco, president and CEO, Advance Auto Parts. "In addition to making these critical customer investments, we are increasing and accelerating our initial gross productivity target of $500 million over five years to $750 million over four years. While some of this cost benefit will be used to fund growth initiatives, much of it will drive margin improvement. Our sustained focus on the customer will position us to deliver sequential top line improvement in comparable store sales and improved profitability as our productivity agenda accelerates in the second half of 2017.”



As of April 22, 2017, Advance Auto operated 5,059 stores and 130 Worldpac branches, and served approximately 1,250 independently owned Carquest stores.