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Advance Auto Parts Inc. Reports Operating Results (10-Q)

November 13, 2012 | About:
10qk

10qk

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Advance Auto Parts Inc. (AAP) filed Quarterly Report for the period ended 2012-10-06.

Advance Auto Parts Inc has a market cap of $5.75 billion; its shares were traded at around $78.27 with a P/E ratio of 15 and P/S ratio of 0.9. The dividend yield of Advance Auto Parts Inc stocks is 0.3%. Advance Auto Parts Inc had an annual average earning growth of 14.9% over the past 10 years. GuruFocus rated Advance Auto Parts Inc the business predictability rank of 5-star.

Highlight of Business Operations:

For the twelve weeks ended October 6, 2012, AAP produced net sales of $1,386.8 million, a decrease of $8.1 million, or 0.6%, as compared to net sales for the twelve weeks ended October 8, 2011. The sales decline was driven by decreases in both transaction count and pricing. Despite a slight improvement from the second quarter, we continued to experience a decrease in transactions through weaker customer demand from both DIY and Commercial customers which we believe to be driven by the difficult economic environment and lingering effects from this year's warmer winter in certain of our colder weather markets. Pricing was negatively impacted by (i) an increase in promotional activity in response to the lower customer demand, (ii) a lower mix of parts sales partially due to customers' decision to defer routine maintenance and (iii) cost deflation in certain of our product categories compared to the same period last year. For the twelve weeks ended October 6, 2012, AI produced net sales of $74.5 million, an increase of $0.9 million, or 1.3%, as compared to net sales for the twelve weeks ended October 8, 2011.

For the forty weeks ended October 6, 2012, AAP produced net sales of $4,646.7 million, an increase of $28.1 million, or 0.6%, as compared to net sales for the forty weeks ended October 8, 2011. The sales increase was primarily due to sales from new AAP and AI stores opened in the last twelve months partially offset by a decrease in comparable store sales. The AAP comparable store sales decrease of 0.7% was driven by an increase in promotional activity and a decrease in transaction count. For the forty weeks ended October 6, 2012, AI produced net sales of $241.1 million, an increase of $4.7 million, or 2.0%, as compared to net sales for the forty weeks ended October 8, 2011.

AAP produced operating income of $533.2 million, or 11.5% of net sales, for the forty weeks ended October 6, 2012 as compared to $541.7 million, or 11.7% of net sales, for the comparable period of last year. AI generated operating income for the forty weeks ended October 6, 2012 of $10.9 million as compared to $11.4 million for the comparable period of last year. AI s operating income decreased during the forty weeks ended October 6, 2012 primarily due to increased promotional activity and increased percentage of newer stores outside of the Northeastern market which operate at a lower gross profit rate, partially offset by lower incentive compensation and the leverage of SG&A as a result of the maturity of its existing store base.

Net income for the twelve weeks ended October 6, 2012 was $89.5 million, or $1.21 per diluted share, as compared to $105.6 million, or $1.41 per diluted share, for the comparable period of Fiscal 2011. As a percentage of net sales, net income for the twelve weeks ended October 6, 2012 was 6.1%, as compared to 7.2% for the comparable period of Fiscal 2011.

Net income for the forty weeks ended October 6, 2012 was $322.6 million, or $4.34 per diluted share, as compared to $328.2 million, or $4.19 per diluted share, for the comparable period of Fiscal 2011. As a percentage of net sales, net income for the forty weeks ended October 6, 2012 was 6.6%, as compared to 6.8% for the comparable period of Fiscal 2011. The increase in diluted EPS was due to the decrease in our average diluted shares outstanding during the forty weeks ended October 6, 2012 as compared to the same period in Fiscal 2011, primarily a result of our repurchases of common stock under our stock repurchase program during Fiscal 2011. The increase in diluted EPS, as a result of the decrease in our average diluted shares outstanding, was partially offset by a decrease in net income for the period.

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