Advance Auto Parts Surprises Street With Profit Outlook Despite Tariffs, CEO Vows Focus On Turnaround

Advance Auto Parts Inc. AAP shares are trading higher on Thursday after the company reported first-quarter results, with quarterly adjusted earnings per share of 22 cents loss, beating the analyst consensus estimate of 82 cents loss.

Quarterly sales of $2.583 billion (down 6.8% year over year) outpaced the Street view of $2.499 billion. Comparable store sales for the first quarter 2025 decreased 0.6%.

“The recently implemented tariffs have created a highly dynamic economic environment. Despite this, the team is staying focused on the turnaround and our path ahead,” said Shane O’Kelly, president and chief executive officer.

Also Read: Advance Auto Parts Accelerates Growth Plan With 130+ New Stores By 2027

Gross profit for the first quarter was $1.1 billion, down from $1.2 billion a year earlier. Gross margin declined to 42.9% from 43.4% in the prior-year quarter. The drop was mainly due to about 90 basis points of margin pressure from liquidation sales at closing stores.

Adjusted operating loss was $8 million, compared to adjusted operating income of $56 million in the year-ago period. Adjusted operating margin dropped to 0.3% from 2.0%. The decline was largely due to about 90 basis points of margin pressure from liquidation sales at closing stores.

On May 13, 2025, Advance Auto Parts declared a regular cash dividend of $0.25 per share to be paid on July 25 to all common stockholders of record as of July 11.

The company exited the quarter with cash and equivalents worth 1.672 billion and net inventories worth $3.731 billion.

Long-term debt totaled $1.491 billion at quarter end, down from $1.789 billion at the end of December 28, 2024.

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Reaffirms Outlook Despite Tariffs

Advance Auto Parts reaffirmed its FY25 adjusted EPS guidance of $1.50 to $2.50, compared to the $1.55 estimate. It also maintained its full-year sales outlook of $8.40 billion to $8.60 billion, compared with the $8.46 billion consensus.

The company sees an adjusted operating income margin for FY25 of 2% to 3%, and Comparable store sales growth of 0.5% to 1.5%.

For the full year 2025, Advance Auto Parts plans to open 30 new stores. The company also expects to launch 10 new market hubs during the year.

“We are reaffirming our annual guidance based on performance to date, expected progress on our strategic initiatives for the balance of the year and our planned mitigation actions for the tariffs currently in effect,” the CEO added.

Price Action: AAP shares are trading higher by 43.90% to $44.99 at the last check Thursday.

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