Advance Auto Parts Reports Third Quarter 2025 Results

Core Insights - Advance Auto Parts reported its strongest quarterly performance in over two years, driven by growth in both the Pro and DIY channels, and is on track for approximately 200 basis points of annual margin expansion in the first year of its turnaround strategy [2][4]. Financial Performance - For the third quarter of 2025, net sales were $2.0 billion, a decrease from $2.1 billion in the same quarter of the previous year, while comparable store sales increased by 3.0% [3][4]. - Gross profit for the quarter was $0.9 billion, representing 43.3% of net sales, an increase from 42.3% in the prior year. Adjusted gross profit was also $0.9 billion, or 44.8% of net sales, up from 42.3% [4][42]. - Selling, general and administrative (SG&A) expenses were $0.9 billion, or 42.2% of net sales, slightly down from 42.3% in the previous year. Adjusted SG&A expenses were $0.8 billion, or 40.4% of net sales, compared to 41.5% in the prior year [6][44]. - Operating income was $22 million, or 1.1% of net sales, compared to break-even in the same quarter last year. Adjusted operating income was $90 million, or 4.4% of net sales, up from $16 million, or 0.7% [8][46]. - The diluted earnings per share for the quarter was $(0.02), an improvement from $(0.42) in the previous year, while adjusted diluted earnings per share was $0.92, compared to $(0.05) [9][35]. Cash Flow and Capital Allocation - Net cash used in operating activities was $118 million, compared to $81 million of cash provided in the same period last year. Free cash flow was an outflow of $277 million, compared to an outflow of $49 million in the prior year [10][49]. - The company declared a regular cash dividend of $0.25 per share, payable on January 23, 2026 [11]. Guidance and Strategic Initiatives - The company updated its full-year guidance, projecting net sales from continuing operations between $8.55 billion and $8.6 billion, with comparable store sales growth of 0.7% to 1.3% [12][13]. - The company plans to open 30 new stores and 14 new market hubs in the upcoming year [13][51]. Store Operations - As of October 4, 2025, Advance Auto Parts operated 4,297 stores, a decrease from 4,788 stores as of December 28, 2024, with 517 stores closed during the year [51].