Advance Auto Parts (AAP 111.00, +5.65) has climbed 5.4% in pre-market as better than expected results overshadow light guidance.
The auto parts retailer reported above-consensus fourth quarter earnings of $0.77 per share on revenue of $2.04 billion, which declined 2.2% year-over-year, but was still ahead of market expectations.
Comparable store sales declined 2.6% year-over-year after increasing 3.1% during the year-ago period.
Gross margin weakened to 42.9% from 43.6% one year ago. The decline was driven by higher supply chain costs and the non-cash impact of inventory optimization.
Selling, General, and Administrative expenses represented 4.3% of revenue, down from 5.1% one year ago. Lower labor and third-party costs were partially offset by higher medical and insurance costs. The company's total store count at the end of 2017 was unchanged year-over-year (5,183), but was down sequentially.
The company began the quarter with 5,203 total stores. Eleven Advance Auto Parts stores were opened during the quarter while 13 AAP locations were closed. Eight Carquest stores were converted into AAP stores. The company added one new Carquest store while closing 18 locations and consolidating one location. One Worldpac store was opened during the quarter while another Worldpac store was closed.
Looking ahead, the company expects that revenue for fiscal year 2018 will be between $9.10 billion and $9.40 billion, which is shy of market expectations. Advance Auto Parts expects that comparable store sales will decline 2.0% year-over-year.