Advance Auto Parts (AAP 134.20, -6.46) is down 4.6% after missing first quarter expectations. With today's decline, the stock trades at a fresh low for 2017, extending its year-to-date loss to 20.7%.
The auto parts retailer reported below-consensus first quarter earnings of $1.60 per share on a 3.0% year-over-year decline in revenue to $2.89 billion, which was also shy of expectations.
The disappointing report from Advance Auto Parts follows yesterday's below-consensus results from AutoZone (AZO 580.08, -1.32), and comes amid growing concerns about the strength of the auto market.
Comparable store sales declined 2.7% year-over-year after falling 1.9% in the same quarter a year ago. A shift of winter-related demand to December contributed to the decline in sales.
There was some pressure on margins, reducing gross margin by 135 basis points to 44.0%. Operating margin fell to 7.1% from 10.6% due to higher expenses. The company expects an improvement in margins from productivity initiatives that are expected to reach $750 million over four years. Previously, the company expected $500 million in productivity initiatives over five years.
The retailer had 5,189 active stores at the end of the quarter, which was unchanged on a sequential basis. However, the company made some changes like converting 38 Carquest stores to Advance Auto Parts. The company opened eight new Advance Auto Parts locations, closed four, and consolidated three.