On Monday, Advance Auto Parts posted a drop in profit that was worse than had been expected for its most recently ended quarter due to weak sales at same-stores continuing to drag on its top line.
Tom Greco the CEO at Advance said in a prepared statement that the results from the second quarter were unacceptable and the company was moving swiftly yet thoughtfully to making necessary changes in a number of different important areas in the organization.
Decisive action added Greco was being taken to deliver improvements in the near term with the focus set on the acceleration of commercial growth as well as improving company execution.
Starboard Value’s stake in the automotive parts seller was revealed this past September and has pushed Advance to improve the bottom line, which Starboard says trails peers such as O’Reilly Automotive and AutoZone.
The hedge fund built its stake in the automotive parts seller and said the company did not do sufficient enough work on stocking shelves each day, which can cost significant sales over the long run.
During its June ending quarter, Advance said it earnings were $124.5 million equal to $1.68 per share, which was down from the $150 million equal to $2.03 per share from the same period one year ago.
Results were lowered by 14 cents per share from amortization of intangible assets as well as 26 cents per share from restructuring and integration costs, primarily associated with its General Parts International acquisition.
Excluding those particular items, the company’s adjusted earnings were down from $2.27 per share to $1.90 per share. That was sharply less than forecasts by analysts that averaged $2.32 per share.
Revenue was down by 4.8% ending the quarter at just over $2.26 billion, which was just more than expectations on Wall Street of more than $2.24 billion. Revenue was hit by a decline of 4.1% in sales at same stores and the closure of some of the company’s stores.
The company’s gross margin was down from one year ago of 45.9% to a current 44.8%, mostly due to expense deleveraging in the supply chain due to a sales decline in comparable stores and higher operating expenses in the supply chain.
Shares in Advance were inactive in early premarket trading, but have increased by 11% since the start of this year.