Advance Auto Parts Inc.
) posted a 14.2% fall in earnings per share to $1.21 in the third
quarter of the year from $1.41 in the same quarter a year-ago due
to weak sales in the cold weather markets,. However, the EPS
tallied the Zacks Consensus Estimate during the quarter. Net
income dipped 15.2% to $89.5 million from $105.6 million a year
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Revenues in the quarter slid $7.5 million or 0.5% to $1.5
billion, reflecting a 1.8% decrease in comparable store versus a
comparable store sales increase of 2.2% during the third quarter
of 2011, offset partially by the positive impact of net addition
of 82 stores during the past 12 months.
Gross margin increased marginally by 31 basis points to 49.8%
from 49.5% in the third quarter of 2011. The improvement in
margin was attributable to increased shrink, cost deflation and
supply chain efficiencies, offset partially by enhanced
promotional activity. However, operating margin shrank 180 basis
points to 10.3% from 12.1% in the fiscal 2011 quarter.
During the quarter, Advance Auto Parts opened 35 stores,
including 7 Autopart International stores. With this, the company
has opened 70 stores, including 13 Autopart International stores,
year-to-date. As of October 6, 2012, the company's total store
count stood at 3,727, including 210 Autopart International
stores. The company is close to reaching the goal of 120 to 140
store openings in fiscal 2012.
During the quarter, Advance Auto Parts repurchased shares worth
$25.2 million compared with the year-ago level of $629.2 million.
At the end of the quarter, the company had nearly $500 million
shares remaining under its share repurchase authorization.
Advance Auto Parts had cash and cash equivalents of $479.4
million as of October 6, 2012, significantly up from $65.9
million as of October 8, 2011. Long-term debt remained flat at
$600.2 million as of October 6, 2012 compared with $600.4 million
as of October 8, 2011. However, long-term debt-to-capitalization
ratio improved to 34.3% from 43.6% a year ago due to a rise in
In the 40-week period ended October 6, 2012, the company's
operating cash flow declined to $504.8 million from $611.0
million in the year-ago period mainly due to lower profits and
higher receivables. Meanwhile, capital expenditures (net)
decreased marginally to $200.9 million from $206.4 million a year
Advance Auto Parts lowered its earnings outlook for 2012 due to
the short-term softness in sales. The company now expects to earn
between $5.05 and $5.15 per share for the year, down from the
prior guidance of $5.25 to $5.35.
Advance Auto Parts, Inc. operates in the U.S. automotive
aftermarket industry and is primarily engaged in selling
replacement parts (excluding tires), accessories, maintenance
items, batteries and automotive fluids for cars and light trucks.
The company is the second leading retailer catering to the DIY
and DIFM (or commercial) customers.
There are unconfirmed published reports claiming that Advanced
Auto Parts was exploring to sell the company. It competes with
O'Reilly Automotive Inc.
Pep Boys-Manny, Moe & Jack
) and currently retains a Zacks #4 Rank on its stock, which
translates to a short-term (1 to 3 months) rating of Sell.