From The Roanoke Times
ROANOKE, VA — Advance Auto Parts just moved up.
Moody’s Investors Service upgraded its ratings for the Roanoke, Va.-based retailer of automotive parts and accessories based on the company’s report for the fiscal year ended Jan. 4.
Advance’s upgrades resulted from improvements in operating performance, including debt reduction and increasing revenues. For 2003, Advance had $3.5 billion in revenues, a 9 percent increase from $3.2 billion in 2002.
Advance generated $356 million in operating cash flow and reduced its debt by $291 million to $445 million in 2003, Moody’s report explained.
Among various considerations, Advance’s “Ba2 senior implied rating,” which moved from a Ba3 rating, reflected the company’s prospects for continued growth and its No. 2 rank in the auto parts and supplies industry.
Advance ranks second behind AutoZone.
Advance has a strong potential for growth, according to Alan Rifkin, an analyst with Lehman Brothers. Rifkin predicts that sales for Advance will rise 7 percent to $3.74 billion in 2004. For 2005, he also forecasts 10 percent growth in sales at $4.11 billion.
Rifkin wrote that advertising campaigns and new store performance have lifted sales at Advance.
But the company’s operating margin is still behind that of its rival, AutoZone, Rifkin reported. In 2003, AutoZone had an operating margin of 16.7 percent, while Advance reported 8.55 percent. Rifkin predicted that Advance’s margin will grow, reaching about 10.25 percent in 2005.
“We believe that plenty of opportunity remains for Advance to close the gap” with AutoZone, he wrote.
Advance had 2,539 stores at the end of 2003.
Copyright 2004 The Roanoke Times, Va. Distributed by Knight Ridder/Tribune Business News
_______________________________________
Click here to view the rest of today’s headlines.
