Advance Auto Parts, Inc. (NYSE:AAP) has reported first-quarter results that missed expectations and slashed its dividend, sending its shares sliding close to 30% lower in Wednesday pre-market trade.
The automotive aftermarket parts provider said net sales rose 1.3% to $3.4 billion in the quarter ended April 22, 2023, with comparable store sales decreasing by 0.4%. Operating income amounted to $90 million, while its operating income margin declined to 2.6% from 6% a year earlier. Diluted earnings per share (EPS) fell to $0.72, compared with $2.26 in the first quarter of 2022.
The consensus estimate of analysts polled by Thomson-Reuters was for sales of $3.43 billion and earnings of $2.57 per share.
“While we anticipated the first quarter would be challenging, our results were below our expectations,” the company’s president and CEO Tom Greco said in the company's earnings statement.
“Our operating margin rate of 2.6% in the quarter was well below expectations due to higher than planned investments to narrow competitive price gaps in the professional sales channel as well as unfavorable product mix.”
Greco said the competitive dynamics the company faced in the first quarter are expected to continue, resulting in a shortfall to its 2023 expectations.
Dividend slashed
The company now expects full-year 2023 net sales of $11.2 billion to $11.3 billion, down from its previous guidance of $11.4 billion to $11.6 billion. Diluted EPS for the year is now likely to range between $6 to $6.50, down from $10.20 to $11.20 previously.
“Given the shortfall experienced this quarter, along with our revised outlook for the balance of the year, we are reducing our full-year 2023 guidance,” the company’s executive vice president and chief financial officer Jeff Shepherd added.
“In addition, our board of directors made the decision to reduce our quarterly cash dividend to provide enhanced financial flexibility. We are committed to improving our operational performance and driving increased profitability.”
The company cut its quarterly dividend to $0.25 per share, from $1.50 previously.
Its shares were 29% lower at $79.20 in pre-market trade.
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