Retail

Why This Retailer Is Among the Few to Survive the Holidays Unscathed

Chris Lange

Published: February 18, 2020 9:55 am

Advance Auto Parts Inc. (NYSE: AAP) released its most recent quarterly results before the markets opened on Tuesday. The auto parts retailer said that it had $1.64 in earnings per share (EPS) and $2.1 billion in revenue, which compares with consensus estimates of $1.35 in EPS and $2.12 billion in revenue. The fourth quarter of last year reportedly had EPS of $1.17 on $2.11 billion in revenue.

During the most recent quarter, net sales increased only 0.4% and comparable sales increased by 0.1%.

Adjusted operating income was $149.9 million in the fourth quarter, an increase of 18.0% from the same quarter of the prior year. On a GAAP basis, the operating income was $126.1 million, an increase of 49.7% year over year.

Looking ahead to the 2020 fiscal full year, the company expects to see net sales in the range of $9.88 billion to $10.1 billion with comparable sales increasing between 0.0% and 2.0%. Consensus estimates call for $8.90 in EPS and $9.93 billion in revenue for the year.

Tom Greco, president and CEO, commented:

Advance once again delivered another quarter of net sales growth along with an acceleration of adjusted operating income growth amidst a challenging demand environment in Q4. Although sales growth was below our expectations, we grew adjusted operating margin by 106 basis points, which reinforces our team’s commitment to delivering continuous, incremental improvement on the substantial margin expansion opportunity we have. In addition, our entire Advance team, including our network of Independent Carquest Partners, delivered net sales growth for the second consecutive year, which enabled us to make excellent progress on our long-term objectives. In particular, we ramped up investment in supply chain, eCommerce and technology, which will strengthen our customer value proposition in the future.

Shares of Advance Auto Parts traded up about 9% early Tuesday to $145.75, a 52-week range of $129.94 to $182.56. The consensus price target is $166.29.