1. Advance Auto Parts reported Q1 2025 net sales of $2.6 billion. 2. Comparable store sales decreased 0.6% amid store closures. 3. Gross profit margin dropped due to liquidation sales. 4. Operating loss increased to $131 million from prior profit. 5. Dividends reaffirmed at $0.25 per share for July 2025.
The significant operating loss and declining sales raise concern. Historical downturns saw similar losses lead to stock declines.
Financial performance and store optimization impact future growth and investor confidence.
Immediate financial results can quickly affect investor sentiment, as seen historically.
RALEIGH, N.C.--(BUSINESS WIRE)--Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America that serves both professional installer and do-it-yourself customers, announced its financial results for the first quarter ended April 19, 2025.
"The Advance team delivered better than expected sales and profitability in the first quarter and I want to thank them for their hard work and commitment to serving our customers. During the quarter, we also successfully completed our store footprint optimization within an accelerated timeframe, while continuing to make progress on our other strategic initiatives. This progress was evident in our Pro performance during the quarter, with 8 consecutive weeks of US Pro comparable sales growth,” said Shane O'Kelly, president and chief executive officer. "The recently implemented tariffs have created a highly dynamic economic environment. Despite this, the team is staying focused on the turnaround and our path ahead. We are reaffirming our annual guidance based on performance to date, expected progress on our strategic initiatives for the balance of the year and our planned mitigation actions for the tariffs currently in effect."
First Quarter 2025 Results (1,2)
First quarter 2025 net sales totaled $2.6 billion, compared with $2.8 billion in the first quarter of the prior year. Comparable store sales for the first quarter 2025 decreased 0.6% and does not include store closing sales at more than 500 corporate locations that were closed in the quarter as part of our store optimization program.
The Company's first quarter 2025 gross profit was $1.1 billion, or 42.9% of net sales compared with $1.2 billion, or 43.4% in the first quarter of the prior year. The deleverage was primarily driven by approximately 90 basis points of margin headwind associated with liquidation sales at closing store locations.
The Company's first quarter 2025 selling, general and administrative (SG&A) expenses were $1.2 billion, or 48.0% of net sales compared with $1.2 billion, or 41.5% in the first quarter of the prior year. Adjusted SG&A expenses were $1.1 billion, or 43.2% of net sales in the first quarter of 2025 compared with $1.1 billion, or 41.4% in the first quarter of 2024. The deleverage was primarily driven by higher labor-related expenses compared with the prior year.
The Company's first quarter 2025 operating loss was $131 million, or 5.1% of net sales, compared with operating income of $53 million, or 1.9% in the first quarter of the prior year. Adjusted operating loss was $8 million, or 0.3% of net sales, compared with adjusted operating income of $56 million, or 2.0% in the first quarter of 2024. Our first quarter 2025 adjusted operating margin was negatively impacted by approximately 90 basis points of margin headwind associated with liquidation sales at closing store locations, that is not included in non-GAAP adjustments.
| _______________________________ |
(1) All comparisons are based on continuing operations for the same time period in the prior year. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. Acquired stores are included in the Company's comparable store sales one year after acquisition. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Closed stores and stores in process of closing under the restructuring plan are not included in the comparable store sales calculation. |
(2) Comparative financial information related to results from continuing operations has been recast to reflect the presentation of our former Worldpac, Inc. business (“Worldpac”) as discontinued operations. Refer to the Company’s Annual Report on Form 10-K for 2024, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025. |
The Company's first quarter 2025 effective tax rate benefit was 118.3%, compared with an effective tax rate expense of 41.4% in the first quarter of 2024. The Company's effective tax rate was impacted by a discrete benefit of $126 million in the first quarter of 2025. The Company's diluted earnings per share for the quarter was $0.40, compared with $0.29 in the first quarter of 2024. The Company's adjusted diluted loss per share was $0.22 compared with earnings per share of $0.33 in the first quarter of 2024.
Net cash used in operating activities was $156 million through the first quarter of 2025 versus $3 million of cash used in operating activities in the same period of the prior year. Free cash flow through the first quarter of 2025 was an outflow of $198 million compared with an outflow of $49 million in the same period of the prior year.
Capital Allocation
On May 13, 2025, the Company declared a regular cash dividend of $0.25 per share to be paid on July 25, 2025, to all common stockholders of record as of July 11, 2025.
Full Year 2025 Guidance (53 weeks)
We have reaffirmed our full year 2025 guidance as shown in the table below. Our guidance assumes current tariffs remain in place for the remainder of 2025.
As of May 22, 2025 |
|||
($ in millions, except per share data) |
Low |
High |
|
Net sales from continuing operations (1) |
$8,400 |
|
$8,600 |
Comparable store sales (52 weeks) (2) |
0.5% |
|
1.5% |
Adjusted operating income margin from continuing operations (4) |
2.00% |
3.00% |
|
Adjusted diluted EPS from continuing operations (3,4) |
$1.50 |
$2.50 |
|
Capital expenditures |
|
Approx. $300 |
|
Free cash flow (4) |
$(85) |
|
$(25) |
New store growth |
|||
Store openings |
30 new stores |
||
Market hub openings |
10 new market hubs |
||
The Company's first quarter 2025 effective tax rate benefit was 118.3%, compared with an effective tax rate expense of 41.4% in the first quarter of 2024. The Company's effective tax rate was impacted by a discrete benefit of $126 million in the first quarter of 2025. The Company's diluted earnings per share for the quarter was $0.40, compared with $0.29 in the first quarter of 2024. The Company's adjusted diluted loss per share was $0.22 compared with earnings per share of $0.33 in the first quarter of 2024.
Investor Conference Call
The Company will detail its results for the first quarter ended April 19, 2025, via a webcast scheduled to begin at 8 a.m. Eastern Time on Thursday, May 22, 2025. The webcast will be accessible via the Investor Relations page of the Company's website (ir.AdvanceAutoParts.com).
To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the Company suggests registering a day in advance or at minimum 10 minutes before the start of the call. A replay of the conference call will be available on the Company's Investor Relations website for one year.
About Advance Auto Parts
Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. As of April 19, 2025, Advance operated 4,285 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 881 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com.
Forward-Looking Statements
Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization, financial objectives, operational plans and objectives, statements about the benefits of the sale of the Company’s Worldpac business and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, deterioration of general macroeconomic conditions, geopolitical factors including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please refer to “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.