Advance Auto Parts Inc. (AAP) on Thursday reported a 9 percent decline in profit for the first quarter on lower comparable store sales as well as higher expenses that offset an increase in revenue. However, earnings per share beat analysts' estimates.
Looking ahead, the automotive parts retailer said it now expects fiscal 2013 earnings at the lower end of its prior range, citing softness in the first quarter and the slow start to spring.
Darren Jackson, CEO of Advance Auto Parts said, "During the first quarter, as anticipated, our business continued to be constrained by the unseasonably warm weather last year which had deferred the maintenance on vehicles. Additionally, due to the impact of payroll tax increases on our core consumer, delayed income tax refunds and a very slow start to the spring selling season, our business was softer than anticipated with our comp store sales declining 3.2%."
Roanoke, Virginia-based Advance Auto Parts' first-quarter net income was $121.79 million or $1.65 per share, down from $133.51 million or $1.79 per share in the year-ago period. On average, nineteen analysts polled by Thomson Reuters expected the company to report earnings of $1.62 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter rose 3 percent to $2.02 billion from $1.96 billion in the year-ago period. Analysts had a consensus revenue estimate of $2.01 billion.
The sales increase was driven by the acquisition of BWP and the net addition of 163 new stores over the past 12 months. This was partly offset by comparable store sales decrease of 3.2 percent, compared to comparable store sales increase of 2.1 percent during the year-ago period.
Gross margin edged down to 50.0 percent from 50.1 percent last year, primarily due to planned increases in supply chain costs related to the full operations of the company's new distribution center and the impact of BWP sales, which have a lower gross margin rate as a result of the much higher mix of their sales to commercial customers. The decrease was partially offset by improved shrink rates.
Selling, general and administrative expenses rose 6 percent to $801.14 million due to expense deleverage as a result of the 3.2 percent decline in comparable store sales and increased new store openings.
On May 21, Advance Auto Parts' board of directors declared a regular quarterly cash dividend of $0.06 per share, to be paid on July 5 to stockholders of record as of June 21.
Looking ahead to fiscal 2013, Advance Auto Parts now forecasts earnings at the lower end of its previous outlook range of $5.30 to $5.45 per share. Analysts expect the company to earn $5.54 per share for the year.
In Thursday's regular session, AAP is trading at $84.17, down $1.63 or 1.90 percent on a volume of 258,569 shares.
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