Advance Auto Parts (AAP:US) cuts its profit guidance for the full year, sending its share sharply lower on Wednesday.
The company reported adjusted EPS of $0.72 on revenue of $3.42 billion, which compares to the analyst consensus for earnings of $2.65 per share on revenue of $3.43 billion. Comparable sales fell 0.4%, missing the +0.7% expected by Wall Street analysts.
“While we anticipated the first quarter would be challenging, our results were below our expectations,” said Tom Greco, president and CEO of Advance Auto Parts.
The gross margin fell 410 basis points year-over-year to 43%, missing the 45.1% consensus. Greco said that margins came in “well below expectations due to higher than planned investments to narrow competitive price gaps in the professional sales channel as well as unfavorable product mix.”
As a result, Advance Auto slashed its full-year profit outlook to a range of $6.00 - $6.50 from the previous $10.20 - $11.20. Full-year sales are now seen at $11.25 billion, down from the prior $11.50 billion.
“We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations,” Greco added.
The forward-looking commentary also didn’t please investors, which include prominent Congressman Michael McCaul. The representative from Texas disclosed earlier this year that he invested in AAP stock in the closing weeks of 2022.
This includes the $50,000 - $100,000 investment made on December 05, when AAP shares closed at $148.36. Six months later, shares are down about 50%.