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Advance Auto Parts Reports Second-Quarter Fiscal 2011 Diluted EPS Increase of 26 Percent


9/7/2011

 
ROANOKE, Va. — Advance Auto Parts has announced its financial results for the second quarter ended July 16. Second-quarter earnings per diluted share (EPS) were $1.46, a 26 percent increase over the second quarter last year.

“We are very pleased with our second-quarter results that include double-digit comparable store sales growth in commercial and incremental improvements in DIY,” said CEO Darren Jackson. “Our teams have done a terrific job retooling our operations and financial plans without compromising our core strategic investments to adapt to the reality of the current business environment. We are pleased with the solid start to our third quarter and we remain on track to deliver our financial and strategic objectives for the year.”

Total sales for the second quarter increased 4.4 percent to $1.48 billion, compared with total sales of $1.42 billion during the second quarter of fiscal 2010. The company said this sales increase reflects the net addition of 130 new stores during the past 12 months and a comparable store sales gain of 2.5 percent on top of a 5.8 percent comparable store sales gain during the second quarter of fiscal 2010. Year-to-date, comparable store sales increased 1.9 percent, which was on top of a 6.9 percent increase over the same period in fiscal 2010.

The company’s gross profit rate was 49.7 percent of sales during the second quarter as compared to 50.4 percent during the second quarter last year. The 72 basis-point decline in the gross profit rate was driven by increased shrink expense, supply chain expense de-leverage due to investments in HUBs and higher fuel costs, and increased product acquisition costs, partially offset by continued improvements in merchandising and pricing capabilities. Year-to-date, the company’s gross profit rate was 50.2 percent, or 10 basis points favorable over the same period in fiscal 2010.

The company’s SG&A rate was 37 percent of sales during the second quarter as compared to 38.3 percent during the same period last year. This 138 basis point decrease was primarily due to reduced incentive compensation, benefits from the company’s new variable customer driven labor model which includes the anniversary of investment rollout expenses, as well as a significant decrease in support costs. Partially offsetting the expense reductions were increased strategic investments in support of the company’s Service Leadership and Superior Availability strategies as well as higher fuel costs associated with the company’s commercial delivery program. Year-to-date, the company’s SG&A rate was 39.1 percent versus 39.2 percent during the same period last year.

The company’s operating income during the second quarter of $188.9 million increased 10.1 percent, or 66 basis points, to 12.8 percent of total sales as compared to 12.1 percent during the second quarter of fiscal 2010.

Operating cash flow through the second quarter was $469.6 million versus $495.5 million last year. Free cash flow through the second quarter decreased 29.5 percent to $287.3 million from $407.6 million last year.












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