Advance Auto Parts has announced its financial results for the third quarter ended Oct. 8, 2022.
Third quarter of 2022 net sales totaled $2.6 billion, a 0.8% increase compared with the third quarter of the prior year, primarily driven by strategic pricing and new store openings. The company says comparable store sales for the third quarter of 2022 decreased 0.7%, which was impacted by increased owned brand penetration, which has a lower price point than national brands.
The company’s GAAP gross profit decreased 0.2% to $1.2 billion. Adjusted gross profit increased 2.9% to $1.2 billion. The company’s GAAP Gross profit margin of 44.7% of net sales decreased 44 basis points compared with the third quarter of the prior year. Adjusted gross profit margin increased 98 basis points to 47.2% of net sales, compared with 46.2% in the third quarter of 2021. This was primarily driven by improvements in strategic pricing and product mix as well as owned brand expansion. These headwinds were partially offset by continued inflationary product costs and unfavorable channel mix.
Net cash provided by operating activities was $483.1 million through the third quarter of 2022 versus $924.9 million in the same period of the prior year. The decrease was primarily driven by lower Net income and working capital. Free cash flow through the third quarter of 2022 was $149.5 million compared with $734 million in the same period of the prior year.
“I want to thank the entire family of Advance team members as well as our growing network of independent partners for their continued dedication,” said Tom Greco, president and CEO. “We continue to execute our strategy to drive full year net sales growth and adjusted operating income margin expansion while returning excess cash to shareholders. In the third quarter, net sales grew 0.8% which benefited from improvements in strategic pricing and new stores, while comparable store sales declined by 0.7% in-line with previous guidance. Our deliberate move to increase owned brand penetration, which carries a lower price point, reduced net sales by approximately 80 basis points and comp sales by approximately 90 basis points. We also continued to invest in our business while returning approximately $860 million in cash to our shareholders through the first three quarters of 2022.
“We’re reiterating our full year guidance that implies 20 to 40 basis points of adjusted operating income margin expansion, despite margins contracting in the third quarter. 2022 will be the second consecutive year that we have grown adjusted operating income margins in a highly inflationary environment. Our industry has proven to be resilient, and the fundamental drivers of demand remain positive. While we continue to execute against our long-term strategic plan, we’re not satisfied with our relative topline performance versus the industry this year and are taking measured, deliberate actions to accelerate growth.”