Advance Auto Parts Inc.
) announced an 8.2% fall in earnings per share to $1.34 in the
second quarter of 2012 compared to $1.46 in the corresponding
quarter last year, missing the Zacks Consensus Estimate by 6 cents.
In absolute terms, profits decreased 12% to $99.6 million compared
with $113.1 million in the year-ago quarter.
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Revenues fell marginally by 1.3% to $1.46 billion in the reported
quarter, missing the Zacks Consensus Estimate of $1.48 billion. The
decline in revenues was attributable to a 2.7% drop in store sales
versus a 2.5% rise in the same during the second quarter of fiscal
2011. Revenues were positively affected by addition of 65 new
stores during the past 12 months.
Gross profit amounted to $728.9 million, down $6.9 million or 1%
from $735.8 million in the second quarter of 2011. Gross margin was
49.9% in the reported quarter compared to 49.7% in the year ago
quarter. The rise in gross margin was due to improved store shrink
and lower supply costs, partially offset by augmented promotional
SG&A expenses for the quarter went up 2.3% to $559.7 million or
38.3% of sales from $546.9 million or 36.9% in the year ago
quarter. The increase in SG&A expenses was attributable to a
shift in expenses to the reported quarter along with lower sales
Operating income went down 10.4% to $169.2 million or 11.6% of
sales in the quarter from $188.9 million or 12.8% of sales in the
year-ago quarter. The decline was driven by a shift in SG&A
expenses to the reported quarter, partially offset by lower
incentive compensation expenses.
During the second quarter, Advance Auto Parts opened 10 new stores,
including 3 Autopart International stores. During the first half of
2012, the company opened 35 stores, including 6 Autopart
International stores. As of July 14, 2012, the company had 3,692
stores, including 203 Autopart International stores. It also plans
to open 120 to 140 stores in 2012.
Advance Auto Parts had cash and cash equivalents of $448.6 million
as of July 14, 2012 compared with $68.8 million as of July 16,
2011. Long-term debt was $600.5 million as of July 14, 2012,
compared to $566.4 million as of July 16, 2011.
In the twenty-eight week period ended July 14, 2012, operating cash
flow went down to $411.4 million from $469.5 million in the
prior-year period. Capital expenditures were $146.3 million in the
period, compared to $151.6 million a year ago. Free cash flow for
the period was $265.4 million compared to $287.3 million a year
Advance Auto Parts anticipates that comparable store sales would be
slightly lower or flat compared to the last year due to the soft
business environment. Earnings per share would be in the range of
$5.25 to $5.35 per share for 2012.
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.
It is the one of the leading retailer ensuring quality and
confidence of the customers at affordable prices.
However, sluggish economy and uncertainty in the market are leading
to weak consumer demand. Further, the company faces strong
competition from other automotive retailers including
O'Reilly Automotive Inc.
). These factors have led the company to retain a Zacks #5 Rank,
which translates into a short-term (1 to 3 months) Strong Sell