Advance Auto Parts, Inc. has recently released its 10-Q report, providing a detailed look at the company's financial performance and strategic initiatives. The company, founded in 1929 and based in Raleigh, North Carolina, offers a wide range of automotive replacement parts, accessories, batteries, and maintenance items for both professional installers and do-it-yourself customers. Advance Auto Parts operates stores under the Advance Auto Parts and Carquest names, as well as branches under the Worldpac name. It has a significant presence in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada, along with independently owned Carquest branded stores in Mexico and various Caribbean Islands.
In the third quarter of 2024, Advance Auto Parts reported net sales of $2.15 billion, a decrease of 3.2% compared with the third quarter of 2023. Comparable store sales declined 2.3%. Gross profit margin for the same period was 42.3% of net sales, marking an increase of 541 basis points compared with the third quarter of 2023. However, selling, general and administrative ("SG&A") expenses for the third quarter of 2024 were 42.2% of net sales, an increase of 185 basis points compared with the third quarter of 2023. The company generated a diluted loss per share of $0.42 during the third quarter of 2024, compared with a diluted loss per share of $1.24 for the comparable period of 2023.
Advance Auto Parts has been undertaking strategic actions to improve its customer experience, margin expansion, and consistent execution for both professional and DIY customers. These actions include the completion of the sale of Worldpac for $1.5 billion, reducing costs while reinvesting in the frontline, making organizational changes to position the company for success, and completing an assessment of the productivity of all assets, including company-owned stores and Carquest Independents. Additionally, the company has outlined a restructuring and asset optimization plan designed to improve profitability and growth potential and streamline its operations.
In terms of store operations, during the forty weeks ended October 5, 2024, 24 stores were opened/converted and 29 were closed, resulting in a total of 4,781 stores as of the end of the third fiscal quarter compared with a total of 4,786 stores as of December 30, 2023.
For the third quarter of 2024, net sales decreased 3.2% and comparable store sales declined 2.3% compared with the third quarter of 2023. Net sales for the forty weeks ended October 5, 2024, decreased 1.3% compared with the same period in 2023. Comparable store sales decreased 0.62% for the forty weeks ended October 5, 2024, compared with the forty weeks ended October 7, 2023. Category growth was led by batteries and filters, partially offset by discretionary categories.
Gross profit for the third quarter of 2024 was $907.9 million, or 42.3% of net sales, compared with $817.6 million, or 36.9% of net sales, for the third quarter of 2023. This increase was primarily due to lapping the one-time impact in the change for inventory reserves in the prior year coupled with stabilizing product costs. Selling, general and administrative expenses for the third quarter of 2024 were $907.5 million, or 42.2% of net sales, compared with $896.1 million, or 40.4% of net sales, for the third quarter of 2023.
The company also provided a reconciliation of non-GAAP financial measures, including Adjusted Net income, Adjusted EPS, Adjusted SG&A Margin, and Adjusted Operating Income. This was done to present financial results that exclude transformation expenses under the company’s turnaround plan, other significant costs, and nonrecurring tax expense, as the company believes these measures are useful and indicative of the company's base operations.
In terms of liquidity and capital resources, the company historically has funded its cash requirements primarily through cash generated from operations, supplemented by borrowings under the company’s credit facilities and note offerings as needed. The company anticipates using cash in connection with its restructuring and asset optimization plan.
Advance Auto Parts' 10-Q report provides a comprehensive overview of its financial performance, strategic initiatives, and the challenges it faces in the automotive aftermarket industry. The market has reacted to these announcements by moving the company's shares -7.0% to a price of $38.34. For the full picture, make sure to review Advance Auto Parts's 10-Q report.
