Advance Auto Parts 2025 Q2 Earnings Sharp EPS Drop Amid Revenue Decline

Advance Auto Parts (AAP) reported fiscal 2025 Q2 earnings on August 15, 2025, with results falling short of expectations. The company’s revenue and earnings both declined significantly, though it reaffirmed full-year guidance. CEO Shane M. O’Kelly highlighted operational progress and resilience amid macroeconomic challenges.

Revenue
Revenue for Q2 fell 7.7% year-over-year to $2.01 billion. The Parts and Batteries segment generated $1.27 billion, while Accessories and Chemicals brought in $442.20 million. Engine Maintenance revenue amounted to $281.40 million, and the Other category accounted for $20.10 million. These figures underscore a challenging environment for the auto parts retail sector.

Earnings/Net Income
Earnings took a hit, with net income dropping to $15 million in Q2 2025 from $45 million in the same period a year ago, a 66.7% decline. Earnings per share also plummeted to $0.25, a 66.7% drop from $0.75 in Q2 2024. Despite these declines, the company has remained profitable for more than two decades during this quarter.

Price Action
The stock faced mixed short-term performance, rising 5.28% on the most recent trading day, declining 2.55% for the week, and falling 8.89% over the past month.

Post Earnings Price Action Review
A strategy of buying AAP shares after the earnings report and holding for 30 days performed poorly, yielding a -25.37% return. This significantly underperformed the benchmark’s 87.16% return. Over a three-year span, the strategy showed a CAGR of -5.80%, with an excess return of -112.53%. While there was no additional downside risk, the investment failed to benefit from the market's positive reaction to the earnings.

CEO Commentary
CEO Shane M. O’Kelly noted Q2 results aligned to the upper end of expectations and emphasized a return to profitability. Strategic initiatives, including store footprint optimization, supply chain improvements, and merchandising transformation, are supporting operational resilience. The CEO expressed cautious optimism for the remainder of 2025 despite macroeconomic uncertainty.

Guidance
Advance Auto Parts reaffirmed its full-year 2025 guidance, targeting net sales of $8.4–8.6 billion. The company expects 50–150 bps in comparable sales growth and an adjusted operating margin of 2–3%. Adjusted diluted EPS is projected between $1.20 and $2.20, while free cash flow is expected to remain negative.

Additional News
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