Advance Auto Parts expects flat Q3 EPS on lower-than-anticipated sales growth; stock plunges - Update

(RTTNews) - Advance Auto Parts, Inc.(AAP | Quote | Chart | News | PowerRating), a retailer of automotive aftermarket parts, Tuesday said revenue for its fiscal third quarter ended October 4 grew about 2.6%, driven by 124 net new stores and flat comparable store sales. The company expects earnings per share to be nearly flat with $0.57 reported for the third quarter of fiscal 2007, due to lower-than-anticipated sales growth. The stock plunged over 13% in Tuesday's trading.

On average, 18 analysts polled by First Call/Thomson Financial expect third quarter earnings of $0.66 per share on a revenue estimate of $1.21 billion.

Additionally, Advance Auto Parts believes the third quarter sales trends will continue through the balance of the fiscal year, as customers further adjust to the challenging economic environment.

The Roanoke, Virginia-based company had expected third quarter sales growth to decelerate from the previous quarter due to the absence of the economic stimulus payments checks issued by the Federal government. For the second quarter, the company reported net sales of $1.24 billion, up 5.6% from the year-ago period.

The company said the challenging economic environment, volatility in the financial and credit markets and the impact of the hurricanes and related gas shortages in the Southeast further restricted sales growth in the third quarter.

Fiscal 2008 third quarter comparable store sales results were considerably lower than the second quarter of 2008, which rose 2.9%.

Commercial comparable store sales increased about 10.9% in the third quarter continuing their double-digit comparable store sales growth. The DIY business experienced comparable store sales declines of nearly 4.2% in the third quarter primarily driven by the current economic environment.

The company expects to release its third quarter earnings on October 29 after the close of market.

"We remain committed to investing in our strategic initiatives while prudently making the necessary adjustments to navigate through the current environment," said Darren Jackson, President and CEO. "We also remain confident in our team members' ability to help our customers navigate through these challenging times."

AAP is currently trading at $29.61, down $4.76 or 13.85%, on 1.47 million shares. For the past year, the stock trended in the range of $30.17-$45.52.

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