Advance Auto Parts' Earnings Fall Back
August 16 2016 - 7:50AM
Dow Jones News
Advance Auto Parts Inc. posted a worse-than-anticipated decline
in profit in the most recent quarter as weak same-store sales
continued to drag on the top line.
"Our second-quarter results were not acceptable and we are
moving thoughtfully and swiftly to make the necessary changes
across a number of critical areas within the organization," said
Chief Executive Tom Greco. "We are taking decisive actions to
deliver near-term improvement with a focus on accelerating our
commercial growth and improving our execution."
Starboard Value LP, whose stake in the seller of automotive
parts was revealed in September by The Wall Street Journal, has
pushed the company to improve its bottom line, which the hedge fund
has said trails peers AutoZone Inc. and O'Reilly Automotive
Inc.
Starboard built a stake in Advance Auto and said the company
didn't do a good enough job of stocking its shelves every day,
which the fund said can cost it sales.
During the June quarter, the company said it earned $124.6
million, or $1.68 a share, down from $150 million, or $2.03 a
share, a year earlier. Results were dented 14 cents a share by
amortization of acquired intangible assets and 26 cents a share by
integration and restructuring costs, primarily associated with the
acquisition of General Parts International Inc. Excluding those
items, adjusted earnings fell to $1.90 a share from $2.27, and
sharply below analysts' forecasts for $2.12 a share.
Revenue slid 4.8% to $2.26 billion—just above analysts'
expectations for $2.24 billion—driven by a 4.1% decline in
same-store sales as well as store closures.
Gross margin fell to 44.8% in the quarter from 45.9% a year ago,
mostly owing to supply chain expense deleveraging due to the
comparable-store sales decline and higher supply chain operating
expenses.
Shares in the company, inactive premarket, have risen 11% so far
this year.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
August 16, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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