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Customer vehicles sit parked outside an Advance Auto Parts automotive supply store in La Grange, Kentucky.
Luke Sharrett | Bloomberg | Getty Images
Shares of Advance Auto Parts plummeted nearly 30% during premarket trading Wednesday after the company’s first-quarter earnings significantly missed Wall Street’s expectations and executives slashed the retailer’s yearly guidance and quarterly dividend.
The Raleigh-based auto parts supplier blamed its dismal first-quarter results and bleaker outlook on higher-than-expected costs for its professional sales, inflationary pressure, supply chain problems and lower, unfavorable product mix.
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The company’s earnings per share for the period came in at just 72 cents, compared with an expected $2.57 per share, according to average analyst estimates compiled by Refintiv. Its quarterly revenue of $3.42 billion slightly missed expectations of $3.43 billion.
“We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations. We have reduced our full-year guidance and our board of directors made the difficult decision to reduce our quarterly dividend,” CEO Tom Greco said in a statement.
On Tuesday, the company declared a dividend of 25 cents per share to be paid out in July. In its prior-quarter earnings release, Advance Auto Parts declared a dividend of $1.50 per share.
Advance Auto Parts also cut its full-year profit outlook and now expects earnings per share of between $6 and $6.50, down from a previously stated range of $10.20 to $11.20. That’s despite lowering its net sales expectations by a range of just $200 million to $300 million, signaling operational problems with margins.
For the first quarter, the company’s net sales rose 1.3% to $3.4 billion compared to a year ago. Its gross profit declined by 2.4% to $1.5 billion.
Net income for the period was $42.7 million, or 72 cents per share, down from $139.8 million, or, $2.28 per share, a year earlier.
“While we anticipated the first quarter would be challenging, our results were below our expectations,” Greco said.
This story is developing. Please check back for updates.
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