WASHINGTON (dpa-AFX) - Advance Auto Parts Inc. (AAP) Thursday reported an increase in profit for the first quarter, driven mainly by revenue growth and lower selling and administrative costs. Nevertheless, earnings for the quarter fell short of analysts' estimates, hurt mainly by a lower gross margins. Revenues also failed to meet expectations.
Moving ahead, the company backed its full-year 2012 earnings outlook, but said results for the second quarter would be 'constrained.' Investors reacted negatively to the announcement, sending Advance Auto shares plummeting 15 percent on the New York Stock Exchange.
Advance Auto Parts, which sells aftermarket car parts mainly in the US, has benefited largely from many consumers still running on their old cars, requiring more part replacements. However, rising fuel prices and many Americans trading their old car for new ones may be a matter of concern.
Gross margins for the quarter dropped to 50.1 percent from 50.5 percent last year, negatively impacted by supply chain costs reflecting slower pace of inventory growth.
On the positive side, the company was able to lower its selling, general and administrative expenses to $756.1 million from $772.2 million last year. Advance Auto Parts said this was driven mainly by the actions taken last year to increase productivity, a planned shift in costs from the first quarter to the second quarter, and continued actions to reduce overall administrative costs.
As a result of lower SG&A expenses, Advance Auto Parts' operating margin rose to 11.5 percent from 9.8 percent last year.
The auto parts retailer's first-quarter comparable store sales, or sales in stores open for at least a year, increased 2.1 percent, while it added 82 net new stores in the past 12 months.
Total sales for the quarter grew 3.1 percent to $1.96 billion, but were short of analysts' estimate of $2.00 billion.
The Roanoke, Virginia-based company's first-quarter profit climbed to $133.5 million or $1.79 per share from $109.6 million or $1.35 per share last year. On average, 19 analysts polled by Thomson Reuters expected earnings of $1.81 per share for the quarter. Analysts' estimates typically exclude one-time items.
Finance Chief Mike Norona said, 'Due to our slow start to the second quarter we anticipate our business results will be constrained during our second quarter. As a result, we now anticipate our annual comp store sales will be in the low single digits for 2012. Norona also backed the earnings guidance of $5.55 to $5.75 per share for the full year 2012. Analysts currently project earnings of $5.97 per share for the full year.
Advance Auto Parts is currently trading at $69.64, down $12.46 or 15.18%, on a volume of 5 million, above the three-month average volume of 1 million shares.
Copyright RTT News/dpa-AFX
© 2012 AFX News
