Advance Auto Parts 2025 Q1 Earnings Misses Targets as Net Income Declines 40%

Advance Auto Parts (AAP) reported its fiscal 2025 Q1 earnings on May 21st, 2025. The company missed expectations as both revenue and earnings fell significantly compared to the same quarter last year. Despite challenges, Advance Auto Parts reaffirmed its annual guidance, projecting modest growth in comparable store sales and adjusted EPS. The retailer is focusing on its turnaround strategy amidst ongoing tariff impacts.

Revenue
The total revenue of Advance Auto Parts decreased by 6.8% to $2.58 billion in 2025 Q1, down from $2.77 billion in 2024 Q1.

Earnings/Net Income
Advance Auto Parts's EPS declined 40.3% to $0.40 in 2025 Q1 from $0.67 in 2024 Q1. Meanwhile, the company's net income declined to $24 million in 2025 Q1, down 40.0% from $40 million reported in 2024 Q1. The EPS performance reflects significant challenges faced by the company.

Price Action
The stock price of Advance Auto Parts has dropped 5.92% during the latest trading day, has dropped 4.31% during the most recent full trading week, and has dropped 4.07% month-to-date.

Post Earnings Price Action Review
The strategy of purchasing Advance Auto Parts (AAP) shares after its revenue increase quarter-over-quarter on the financial report release date and holding for 30 days resulted in significant losses. The strategy's return was -83.61%, starkly underperforming a benchmark return of 45.97%, indicating an excess return of -129.58%. The strategy's compound annual growth rate (CAGR) was -45.50%, with a maximum drawdown of -87.08%, illustrating the substantial risk and negative performance associated with this approach.

CEO Commentary
"The Advance team delivered better than expected sales and profitability in the first quarter," said Shane O'Kelly, president and chief executive officer. He acknowledged the successful completion of the store footprint optimization and highlighted the strong Pro performance with 8 consecutive weeks of US Pro comparable sales growth. O'Kelly noted the challenges posed by recently implemented tariffs but expressed confidence in the team's focus on the turnaround and reaffirmation of annual guidance based on current performance and mitigation strategies.

Guidance
The company has reaffirmed its full-year 2025 guidance, projecting net sales from continuing operations between $8.4 billion and $8.6 billion, with comparable store sales growth expected between 0.5% and 1.5%. Adjusted operating income margin is anticipated to range from 2.00% to 3.00%, while adjusted diluted EPS is forecasted between $1.50 and $2.50. Free cash flow is expected to be in the range of $(85) million to $(25) million, assuming current tariffs remain in effect through the remainder of the year.

Additional News
Advance Auto Parts recently held its 2025 Annual Meeting of Stockholders on May 15th, where security holders voted on the election of 9 nominees to the Board of Directors. In addition, the company announced restructuring plans in late 2024, including closing over 700 stores by mid-2025. This decision aims to align business operations with market realities amid weakening demand for motor vehicle parts. The restructuring involves closing corporate and independent stores as well as distribution centers, with costs estimated between $350 million to $750 million. Despite these challenges, Advance Auto Parts continues to explore expansion opportunities, including new store openings to strengthen its market presence across North America.