Advance Auto Parts today announced its financial results for the first quarter ended April 18, 2020.
“During the first quarter of 2020, Advance was significantly impacted by COVID-19,” said Tom Greco, president and CEO. “As we disclosed previously, stay at home orders in all of our markets from mid-March to the end of our first quarter ending April 18 resulted in significantly reduced car counts in our professional business and less retail traffic in DIY. As an essential business, I could not be prouder of how our team members and independent partners continued to serve our customers with ‘CARE’ and ‘SPEED’ during this difficult time. In terms of CARE, nothing is more important than the health and safety of our team members and customers. We responded to the pandemic with urgency making significant investments in PPE to help keep our team members and customers safe. In terms of SPEED, we repurposed investments in digital, e-commerce and marketing to launch our mobile app along with a new suite of services we’ve branded ‘Advance Same Day’ for DIY customers. We supported our professional customers by providing contact free delivery options and virtual, instructor-led training courses. We did this while remaining focused on our financial priorities, including increasing on balance sheet liquidity by $1 billion and continuing to return cash to shareholders through our recently declared $0.25 per share quarterly cash dividend. Our hard work in strengthening our balance sheet has allowed us to remain committed to the increased dividend we announced earlier this year.
Greco concluded, “No matter how challenging this crisis has been, we remain steadfast in our vision of ‘Advancing a World in Motion.’ This entails driving financial performance as we develop our people, reduce our environmental impact and give back to our communities. These themes are brought to life in our 2019 Corporate Sustainability and Social report, which we are pleased to publish in conjunction with our Q1 results. We expect that we will emerge from this difficult time stronger by continuing to focus on our people, our planet and the communities we serve, and by delivering for our customers with CARE and SPEED.”
First Quarter 2020 Financial Results
Net sales for the first quarter of 2020 were $2.7 billion, an 8.6% decrease versus the first quarter of the prior year. Comparable store sales for the first quarter of 2020 decreased 9.3%.
Adjusted gross profit decreased 10.9% to $1.2 billion, primarily due to significantly lower sales volume. Adjusted gross profit margin was 43.5% of net sales in the first quarter of 2020, a 113 basis point decrease from the first quarter of 2019, due to supply chain deleverage, product mix and tariff related cost increases, which were partially offset by pricing and the reduced impact of the LIFO accounting method. The company’s GAAP gross profit margin decreased to 43.5% from 44.2% in the first quarter of the prior year.
Operating cash flow was $10.9 million through the first quarter of 2020 versus $204.5 million in the same period of the prior year, a decrease of 94.7%. Free cash flow through the first quarter of 2020 was negative $72.1 million, a decrease of 150.3% compared to the same period of the prior year.
2020 Full Year Guidance
The company withdrew guidance on April 9, 2020, and given uncertainties related to the full impact of the COVID-19 pandemic, the company is not providing guidance at this time.