Advance Auto Parts Inc. (AAP) saw a 6.2% rise in its stock during premarket trades on Wednesday, following the announcement of its plan to conduct an operational and strategic review of its business. In addition to this, the company revealed that Shane O’Kelly, formerly the chief executive of Home Depot Inc.’s (HD) HD Supply unit, will now assume the position of chief executive, as Tom Greco prepares for retirement.
Adjusted Sales and Earnings Guidance for 2023
Advance Auto Parts now expects its same-store sales for 2023 to fall within the range of a 0.5% decline to a 0.5% gain. This forecast has been revised down from its previous estimate of a 1% drop to flat performance, signaling a more cautious outlook.
The company has also adjusted its earnings estimate for 2023, projecting a range between $4.50 and $5.10 per share, compared to the original projection of $6 to $6.50 per share. These figures contrast with the FactSet consensus estimate of $5.89 per share.
Professional Business Strength and Challenges
While Advance Auto Parts acknowledges the strength of its professional business, it is also aware of several challenges it faces in the marketplace. These include maintaining competitive price targets, adapting to shifts in channel mix, and making necessary investments in its team.
Financial Performance Snapshot
In the second quarter, the company reported earnings of $1.43 per share, falling short of the analyst consensus of $1.66 per share. However, sales increased by 0.8% to reach $2.67 billion, slightly surpassing the estimated figure of $2.66 billion.
Advanced Auto Parts’ decision to conduct a comprehensive review demonstrates its commitment to evaluating and enhancing its operations and strategies, ensuring continued success in the ever-evolving automotive industry.