Key Takeaways
- Advance Auto Parts posted earnings well below estimates.
- The auto parts retailer reduced its full-year profit and sales guidance.
- The company slashed its quarterly dividend by more than 83%.
Advance Auto Parts (AAP) was by far the worst-performing stock in the S&P 500 in early trading on Wednesday after the auto parts retailer significantly missed quarterly profit forecasts, cut its outlook, and reduced its dividend.
The company reported fiscal 2023 first quarter earning per share (EPS) of $0.72, well below analysts’ estimates of $2.57. Revenue rose 1.3% to $3.42 billion, also short of predictions.
Advance Auto Parts blamed the disappointing numbers on higher-than-expected costs for professional sales, supply chain issues, inflationary pressures, and an unfavorable product mix. CEO Tom Greco said that “while we anticipated the quarter would be challenging, the results were below our expectations.”
He warned that the company sees “the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations.”
Advance Auto Parts now anticipates full year EPS of $6 to $6.50, far below its earlier guidance of $10.20 to $11.20. It predicts net sales of between $11.2 billion and $11.3 billion, down from its previous forecast of $11.4 billion to $11.6 billion.
The company also slashed its quarterly per share dividend to $0.25 from $1.50. Greco called it a “difficult decision.”
Advance Auto Parts shares were down 33% to their lowest level in more than a decade as of 11 a.m. ET on Wednesday.
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Source: https://www.investopedia.com/advance-auto-parts-misses-profit-estimates-cuts-outlook-and-dividend-7506055?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo