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Advance Auto Parts (AAP) delivered Q2 EPS of $0.69, surpassing consensus estimates, marking its second consecutive quarter of beating expectations after eight straight misses. Comparable store sales turned positive at +0.1%, driven by sustained strength in the Pro business, a notable improvement after multiple quarters of declines. However, this positive performance was largely anticipated, as the company had issued upbeat Q2 revenue guidance on July 24, projecting comp growth of 0.0-0.1%, which aligned closely with results.

• Consequently, investor focus shifted to AAP’s sharply lowered FY25 EPS guidance of $1.20-$2.20, down from $1.50-$2.50, despite maintaining revenue guidance of $8.40-$8.60 bln and comparable store sales growth of +0.5-1.5%. The downward revision in EPS outlook was primarily driven by approximately $0.30 of incremental net interest expense from a recent $1.95 bln senior notes offering, coupled with ongoing cost pressures from higher labor expenses and persistent softness in the DIY segment, which offset gains from footprint optimization and supply chain enhancements.
• Under CEO Shane O’Kelly, who took the helm in 2023, AAP has been executing a turnaround strategy centered on supply chain optimization, cost reduction, and store footprint rationalization. Last quarter’s significant EPS beat fueled optimism, as early benefits from streamlined operations and reduced SG&A expenses demonstrated progress. However, the reduced FY25 EPS guidance has dampened investor enthusiasm, signaling that the turnaround is facing headwinds.
• AAP, alongside competitors like O’Reilly Auto Parts (ORLY) and AutoZone (AZO), continues to grapple with softness in the DIY business, particularly in discretionary categories like accessories and maintenance items, as consumers prioritize essential repairs amid economic uncertainty. CEO O’Kelly highlighted early signs of stabilization in the DIY segment, but the Pro business remains the primary growth driver, with strength in core categories such as brakes, filters, and batteries fueling the modest +0.1% comp sales growth.
• In contrast, ORLY reported a +4.1% comp sales increase in Q2, and AZO posted +5.4% (cc) in 3Q25, underscoring AAP’s lag in capturing market share. The Pro segment’s resilience reflects AAP’s strategic focus on professional installers, supported by an optimized distribution network, but the weaker DIY performance continues to weigh on overall results.

AAP’s turnaround momentum stalled with the significant FY25 EPS guidance cut, driven by higher interest expenses and ongoing DIY market challenges, undermining investor confidence. The company struggles to regain competitive ground against ORLY and AZO, which have demonstrated stronger comp sales growth in a tough retail environment. While supply chain improvements and Pro business strength provide some optimism, AAP faces an uphill battle to restore profitability and market share in the automotive aftermarket sector.