Advance Auto Parts reports 3Q 2016 sales decline

Nov. 15, 2016
Total sales for the third quarter decreased 2.0% to $2.25 billion, as compared with total sales during the third quarter of fiscal 2015 of $2.30 billion.

Advance Auto Parts announced Nov. 14 its financial results for the third quarter ended October 8, 2016.

Third quarter GAAP earnings per diluted share (Diluted EPS) were $1.53. Third quarter Adjusted earnings per diluted share (Adjusted EPS) were $1.73, which exclude $0.08 of amortization of acquired intangible assets and integration and restructuring costs of $0.12 primarily associated with the acquisition of General Parts International, Inc. (General Parts).

“Our third quarter results reflect progress in driving our top line as the initiatives and investments we are making to stabilize and improve our sales performance began to take hold. While we delivered sequential improvement, our results are not where we want them to be and we remain relentlessly focused on taking the actions necessary to improve our execution and generate positive comparable sales performance,” said Tom Greco, President and Chief Executive Officer.

“As we execute against our strategy to deliver more consistent, improved performance over the long term, we have sharpened our attention on sales execution, consistent availability and delivering on the needs of our customer with every interaction. We are confident this is the right path forward," he said.

Third quarter 2016 highlights

Total sales for the third quarter decreased 2.0% to $2.25 billion, as compared with total sales during the third quarter of fiscal 2015 of $2.30 billion. The sales decline was driven by the comparable store sales decrease of 1.0%, the store closures in 2015 and the effect of Carquest store consolidations. The sales decline was partially offset by new store and Worldpac branch openings.

The company's Gross Profit rate was 43.9% of sales during the third quarter as compared to 45.0% during the third quarter last year. The 104 basis-point decrease in gross profit rate was primarily the result of higher supply chain expenses and headwinds associated with reducing inventory levels.

On a GAAP basis, the company's SG&A rate was 35.3% of sales during the third quarter as compared to 36.0% during the same period last year. The 70 basis-point decrease was primarily due to lower integration and restructuring related costs during the third quarter compared to last year. Excluding this impact, the company's adjusted SG&A rate was essentially flat year-over-year reflecting the company's continued cost reduction initiatives partially offset by investments in customer service initiatives. The company's adjusted SG&A rate was 34.3% of sales during the third quarter as compared to 34.4% during the same period last year.

On a GAAP basis, the company's operating income during the third quarter was $193.8 million, a decrease of 5.7% versus the third quarter of fiscal 2015. On a GAAP basis, the Operating Income rate was 8.6% during the third quarter as compared to 9.0% during the third quarter of fiscal 2015. The company's adjusted Operating Income was $217.6 million during the third quarter, a decrease of 10.8% versus the third quarter of fiscal 2015. As a percentage of sales, adjusted Operating Income in the third quarter was 9.7% versus 10.6% during the third quarter of fiscal 2015.

Operating cash flow decreased approximately 21.3% to $409.4 million through the third quarter of fiscal 2016 from $520.1 million through the third quarter of fiscal 2015. Free cash flow was $205.2 million through the third quarter of fiscal 2016 compared to $358.9 million through the third quarter of fiscal 2015. Capital expenditures through the third quarter of fiscal 2016 were $204.2 million as compared to $161.2 million through the third quarter of fiscal 2015.

Store information

As of October 8, 2016, the company operated 5,058 stores and 127 Worldpac branches and served approximately 1,250 independently owned Carquest stores.

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