Advance Auto Q4 Loss Narrower Than Expected, Revenues Decline Y/Y

Core Insights - Advance Auto Parts, Inc. (AAP) reported an adjusted loss of $1.18 per share for Q4 2024, which is an improvement compared to the Zacks Consensus Estimate of a loss of $1.38 and a loss of 59 cents in the same quarter last year [1] - The company generated net revenues of $2 billion, exceeding the Zacks Consensus Estimate of $1.93 billion, although comparable store sales decreased by 0.9% year over year [2] - Gross profit fell by 57.6% to $347.1 million, representing 17.4% of net sales, with an operating loss of $820 million and SG&A expenses rising by 35.5% year over year to $1.2 billion [3] Financial Performance - Net cash provided by operating activities was $140.5 million, while negative free cash flow totaled $40.3 million for 2024 [4] - As of December 28, 2024, the company had cash and cash equivalents of $1.87 billion, a significant increase from $488 million as of December 30, 2023, and total long-term debt stood at $1.79 billion [3][4] Future Guidance - For 2025, AAP expects net sales from continuing operations to be between $8.4 billion and $8.6 billion, with plans to open 30 new stores and projected comparable store sales growth of 0.5% to 1.5% [6] - The adjusted operating income margin from continuing operations is anticipated to be in the range of 2% to 3%, with capital expenditures expected to be approximately $300 million [6] Long-term Projections - For 2027, AAP projects net sales of $9 billion and an adjusted operating income margin of 7%, with plans to open 50 to 70 new stores and positive low-single-digit growth in comparable store sales [7] Dividend Declaration - On February 11, 2025, AAP declared a dividend of 25 cents per share, scheduled to be paid on April 25, 2025, to shareholders as of April 11, 2025 [5] Market Position - AAP currently holds a Zacks Rank of 3 (Hold), while other auto sector stocks like Geely Automobile Holdings Limited, Dana Incorporated, and Strattec Security Corporation have a stronger Zacks Rank of 1 (Strong Buy) [8]