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Advanced Auto Parts Q1 profit up, but misses estimates

Published: 18:52 17 May 2012 BST

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Advanced Auto Parts (NYSE:AAP) traded in the red after reporting first-quarter earnings and revenue that missed analysts’ estimates.

The U.S.-based company sells everything from replacement parts, brakes, batteries and maintenance items.

Quarterly profit logged in at $133.5 million, or $1.79 per share, on $1.95 billion in revenue for the 16-weeks ended April 21.

That compared with a year-earlier profit of $109.5 million, or $1.35 per share, on $1.89 billion in sales recorded in 2011.

On average, analysts had expected per-share earnings of $1.82, on $2.0 billion in sales, according to Bloomberg.

Shares tanked 15.48 percent to $69.39 apiece in trade on the New York Stock Exchange on Thursday afternoon.

"We are pleased with our overall performance during our first quarter despite a meaningful slowdown in our sales trends in the month of April," Advanced Auto Parts' chief executive Darren R. Jackson said.

"Second quarter sales trends remain challenging despite the positive long-term industry fundamentals," Jackson added.

Same-store sales grew 2.1 percent up from the 1.4 percent in 2011. This is a key metric to measure a retailer’s health as it excludes stores recently opened or closed during the year.

The company’s overhead costs fell to 38.6 percent from 40.7 percent, due to actions taken last year to increase productivity and cut administrative support costs.

Gross margin eased to 50.1 percent from 50.5 percent, crimped by slower pace of inventory growth which drove higher supply chain costs.

The auto parts retailer opened 25 stores, including three Autopart overseas locations, but closed five Autopart International stores.

At the end of its fiscal first quarter, it had 3,682 stores including 200 Autopart International locations. 

The company’s board authorized a $500 million share buyback program, which now replaces its prior repurchase program in August.

In addition, the company declared a quarterly cash dividend of six cents per share, which will be paid July 6 to shareholders.

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