Advance Auto Parts Cuts Guidance and Introduces Cost-Savings Plan

Revenue was $2.72 billion, up 2.9% from the same quarter last year, and ahead of the $2.68 billion analysts expected.

Management said on a call to discuss the results that higher product costs and wage inflation were continued challenges for the company.

Chief Executive Shane O’Kelly said in the earnings release that the company was “taking decisive actions to position Advance for long-term success and create meaningful value for our shareholders.” This includes initiating a cost-cutting program that management believes will generate at least $150 million in annualized savings.

Advance Auto Parts
also said it has initiated separate sale processes for its Worldpac business and its Canada operations.

Earnings estimates for fiscal 2023 were slashed. Advance Auto Parts now estimates fiscal 2023 earnings of $1.40 to $1.80 a share, down from the previous outlook of $4.50 to $5.10 a share.

The company also lowered the higher end of its range of forecasts for fiscal 2023 sales. Expectations are for 2023 revenue of between $11.25 billion and $11.3 billion, compared with prior estimates of $11.25 billion to $11.35 billion.

“Our updates include the impact of non-recurring expenses in Q3 as well as continued pressure in Q4 from higher product costs that we do not expect to offset with price,” Chief Financial Officer Tony Iskander said in the release.

Shares of Advance Auto Parts were up 2.8% to $60.04 Wednesday after falling in the premarket session. The stock has tumbled 59% this year. Competitor
AutoZone
(AZO) stock was down 1.8% to $2,636.40 while
O’Reilly Automotive
(ORLY) shares declined 1% to $972.91.

Write to Angela Palumbo at [email protected]