North Carolina-based automotive retail company Advance Auto (AAP 170.73, +0.74, +0.44%) touched two-and-a-half month highs this morning, but pares gains in recent trade, in response to the company’s fourth quarter beat and better than feared guidance.
The automotive parts retailer reported fourth quarter earnings per
share (EPS) of $1.17 on revenues which rose 3.3% yr/yr to $2.105 bln; both
metrics narrowly beat the market’s expectations. Advance also announced
comparable store sales growth of 3.4%, narrowly missing what the market had
Adjusted gross profit margin was 44.2% of Net sales in the fourth quarter 2018, a 127 basis point improvement from the fourth quarter 2017. Productivity initiatives, including material cost optimization, better inventory management and a reduction in shrink were the primary drivers and were partially offset by commodity and tariff headwinds.
Adjusted Selling, General and Administrative Expenses (SG&A) were 38.1% of Net sales in the fourth quarter 2018, an increase of 82 basis points as compared to last year. The increase was mostly driven by higher bonus costs and an increase in marketing spend, which were partially offset by leveraging labor as well as reduced insurance and claims expense.
Guidance was better than feared, though the midpoint of Advance’s full year 2019 revenue outlook came in under the market expectations. Specifically, FY19 net sales are expected between $9.65-9.80 bln with comparable store sales in a range of 1.0-2.5%.
Shares have cooled off after the initial pop higher at the open.