Advance Auto Parts lowers FY25 profit guidance on borrowing costs

Advance Auto Parts (NYSE:AAP) lowered its outlook for FY25 to reflect slowing sales momentum and increased borrowing costs, driving shares down by as much as 18% on Thursday.

Despite an improvement in comparable store sales to 0.1% from a 0.6% decline in the prior quarter, total sales were down 7.8% to $2.01B, though still exceeded expectations by $40M.

The auto parts retailer earned an adjusted profit of $0.69 per share, up 11% from the same quarter last year and $0.11 better than expected. Adjusted gross profit as a percentage of net sales improved by 20 basis points to 43.8%, driven by cost savings associated with the company’s footprint optimization activity completed in March.

Looking ahead to the full year results, Advance Auto Parts (NYSE:AAP) lowered its adjusted earnings guidance to reflect higher interest costs associated with its recent notes offering, and assumes the current tariff landscape remains unchanged for the rest of the year.

The company now expects to earn a profit between $1.20 and $2.20 per share versus the prior range of $1.50 to $2.50 per share. At the midpoint of $1.70, the current guidance is below the consensus estimate of $1.85 per share.

Net sales are targeted to be between $8.4B to $8.6B versus $8.52B, while comparable sales are now expected to increase by 0.5% to 1.5%.

Shares of AutoZone (AZO), O’Reilly Automotive (ORLY), and Genuine Parts Company (GPC), are all trading lower in sympathy.