Advance Auto Parts, Inc. (AAP), while announcing weak profit and nearly flat sales in the second quarter, on Wednesday lowered its fiscal 2023 earnings view below market estimates, but lifted sales forecast.
Separately, Advance Auto Parts announced that its board of directors has appointed Shane O’Kelly as president and chief executive officer, effective September 11. O’Kelly will succeed Tom Greco, who has served as president and CEO since April 2016.
The company also announced that Tony Iskander has been named interim chief financial officer, effective August 18.
For fiscal 2023, the automotive aftermarket parts provider now expects earnings of $4.50 to $5.10 per share, down from previous estimate of $6.00 to $6.50.
On average, 24 analysts polled by Thomson Reuters expect earnings of $5.85 per share for the year. Analysts’ estimates typically exclude special items.
Net sales are currently expected to be $11.25 billion to $11.35 billion, higher than earlier expected $11.20 billion to $11.30 billion. The Street estimate net sales of $11.22 billion for the year.
Comparable store sales are now expected to be between down 0.5 percent and up 0.5 percent, while previous estimate was a drop of 1 percent.
Tony Iskander, interim chief financial officer, said, “We are updating our full-year guidance, which considers a modest step up in net and comparable store sales growth driven by strengthening of our professional business. However, we are reducing our outlook for operating income margin rate, diluted earnings per share and free cash flow. This reflects additional headwinds anticipated in the back half of the year driven by our ongoing commitment to maintain competitive price targets, impacts from a shift in channel mix and investments in our team to help retain top talent.”
In the second quarter, earnings decreased to $85.36 million or $1.43 per share from $144.40 million or $2.38 per share last year.
The company’s net sales for the quarter rose 0.7 percent to $2.69 billion from $2.67 billion last year.
The analysts expected earnings of $1.66 per share on net sales of $2.66 billion for the quarter.
Regarding the CEO change, the company noted that O’Kelly has also been appointed to the board of directors, effective September 11. Gene Lee, interim executive chair of the board of directors, will continue in his interim role through the end of the year.
Greco had announced his planned retirement in February 2023 and will stay on as an advisor to ensure a seamless transition.
O’Kelly, who holds more than 30 years of experience, most recently served as CEO of HD Supply, a subsidiary of The Home Depot, Inc. Prior to joining Home Depot, he was the CEO of PetroChoice.
The new interim CFO, Iskander, succeeds Jeff Shepherd, who departed from Advance, effective August 18.
In pre-market activity on the NYSE, Advance Auto Parts shares were trading at $69.00, up 2.5 percent.
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