Advance Auto Parts reports third quarter results
Advance Auto Parts announced its financial results on Oct. 31 for the third quarter ended October 5, 2013. Third quarter earnings per diluted share (EPS) were $1.42, which was a 17.4% increase versus the third quarter last year and includes $0.04 of transaction expenses related to its pending acquisition of General Parts International, Inc. (GPI) and $0.02 of integration expenses for B.W.P. Distributors, Inc. (BWP).
“Our sales grew 4.3% and operating income increased 13.5% in the third quarter compared to the third quarter of 2012. We are pleased with our profit improvement in consecutive quarters and remain cautious on the underlying sales environment,” said Darren R. Jackson, Chief Executive Officer. “We remain focused on improving our sales performance while making the necessary adjustments to our business to continue improving our profitability. Our recent announcement to acquire GPI is another strategic step forward for Advance as we look to accelerate our growth strategy and position Advance to capitalize on positive long-term fundamentals.”
Total sales for the third quarter increased 4.3% to $1.52 billion, as compared with total sales during the third quarter of fiscal 2012 of $1.46 billion. The sales increase was driven by the acquisition of BWP and the net addition of 170 new stores over the past 12 months, partially offset by a comparable store sales decrease of 2.0% versus a comparable store sales decrease of 1.8% during the third quarter of fiscal 2012. Year-to-date, total sales increased 4.3% to $5.09 billion, compared with total sales of $4.88 billion over the same period last year.
The company's gross profit rate was 50.2% of sales during the third quarter as compared to 49.8% during the third quarter last year. The 42 basis-point increase in gross profit rate was realized through increased merchandise margins due to lower acquisition costs partially offset by planned increases in supply chain costs related to the full operations of the company's new distribution center and the impact of BWP sales, which have a lower gross margin rate as a result of their much higher mix of commercial sales. Year-to-date, the company's gross profit rate was 50.2%, a 22 basis-point increase over the same period in fiscal 2012.
“We are pleased that we were able once again to exceed our profit expectations for the quarter,” said Mike Norona, Executive Vice President and Chief Financial Officer. “Despite the continuation of the softer sales environment, our gross profit improvements and disciplined focus on expense management allowed us to increase our earnings per share 17.4% and our operating margins by 91 bps during the quarter. As we enter our fourth quarter, we expect the softer sales environment to continue and our annual 2013 comparable store sales to be in the low negative single digits and reaffirm our annual 2013 EPS outlook to be in the range of $5.30 - $5.45 excluding all one-time costs incurred in the fourth quarter related to the General Parts acquisition."
During the third quarter, the company opened 35 stores, and closed 7 stores inclusive of 5 Autopart International store closures. As of October 5, 2013, the company's total store count was 4,018 including 222 Autopart International stores.
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