Advance Auto Parts Stock Gets Hammered After Q1 Earnings: Here's Why - Advance Auto Parts (NYSE:AAP)

Advance Auto Parts Inc AAP shares are plunging Wednesday morning as its first quarter results missed expectations. The company also reduced its full-year guidance and decided to reduce its quarterly dividend.
AAP reported first-quarter FY23 sales growth of 1.3% year-on-year to $3.42 billion, missing the analyst consensus estimate of $3.43 billion.
The revenue increase was driven by new store openings and was offset by a decline of comparable store sales of 0.4%.
Gross profit fell 2.4% to $1.5 billion with a gross margin of 43%, a 162-basis points contraction, reflecting inflationary product costs that were not fully covered by pricing actions.
Operating margin was 2.6%, and operating income for the quarter plunged 55.7% to $90 million.
The company held $226.5 million in cash and equivalents as of April 22, 2023. The operating cash flow was a use of $(378.9) million.
EPS of $0.72 missed the analyst consensus of $2.57.
"We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations," said Tom Greco, president and CEO.
Dividend Cut: The company's board reduced the quarterly dividend by 83% to $0.25 from $1.50.
Outlook: Advance Auto Parts cut its FY23 revenue outlook from $11.4 billion - $11.6 billion to $11.2 billion - $11.3 billion versus the consensus of $11.43 billion.
The company lowered FY23 EPS guidance from $10.20 - $11.20 to $6.00 - $6.50 versus the Street view of $10.64.
Price Action: AAP shares are trading lower by 25.58% at $83.50 in premarket on the last check Wednesday.

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