Advance Auto Parts Reports 2nd Quarter 2019 Results

Advance Auto Parts reported second quarter net sales of $2.3 billion, a slight increase over the first quarter of 2018.

Comparable store sales for the second quarter, which ended July 13, were flat year-over-year.

For the first half of 2019, Advance reported net sales of $5.3 billion, a 1.6% increase over the first half of 2018. Comparable store sales for the first half were up 1.5% year-over-year.

“While the second quarter was challenging, we continue to make progress, including building a differentiated customer value proposition in both professional and DIY omnichannel in addition to driving productivity for the long term,” Advance President and CEO Tom Greco said in a news release. “We remain committed to our disciplined approach to increasing comparable store sales, expanding margins and delivering significant cash flow in the back half of 2019. This, combined with a strong industry backdrop, gives us confidence that our transformation plan is on track.”

During the company’s second quarter conference call, Greco noted that the spring selling season overlaps Advance’s first and second quarters, “which can impact performance between the two quarters.”

“We saw this play out in our first-half results,” Greco added. “In contrast to 2018, when we had a soft finish to Q1 and a very strong start to Q2, the exact opposite occurred this year.”

During the last four weeks of the company’s first quarter this year, comparable store sales were up “mid-single digits” compared to first-quarter 2018, according to Greco. But then the weather took a turn for the worse.

“The week our Q2 began on April 21, the weather turned cooler and wetter than historic norms, and significantly cooler and wetter than 2018,” Greco said. “As a result, comp sales during the first four weeks of our Q2 were down, driven entirely by DIY retail. In fact, our first full month of the quarter was one of the wettest Mays on record, with many parts of the U.S. also reporting below-average temperatures.”

The wild weather patterns showed up in the company’s regional performance. Sales in Advance’s Northeast, Mid-Atlantic and Great Lakes regions – where the company has a high concentration of stores – “slowed significantly” in the second quarter, compared to the first quarter, Greco noted.

Brakes, filters and batteries were strong sellers overall.

“Not surprisingly, cooling and engine-management-related products were down significantly in Q2, particularly in those same northern geographies,” Greco said. “These categories are already recovering in the third quarter, with extreme heat impacting a large portion of the U.S., and the very regions that slowed down in Q2 are leading the improvement we’ve seen in the early weeks of Q3.”