Advanced Auto Parts, Inc. (NYSE: AAP) dropped 24% this morning after Q2 results were released. The company reported a $1.17 diluted EPS and flat comparable store sales.
The automotive auto parts provider struggled to acclimate to industry headwinds and increasing supply chain costs, seeing its gross profit margin drop to 43.9%. The company had slightly increased sales but a full year guidance for 2017 revealed an expected decline of comparable store sales, -3% to -1%. Investors were left reeling and the stock is trading 3 times its average volume. Sitting at just under $83, it is the lowest price since late 2013.
Confidence in the sector is waning as the updated guidance foresees more industry headwinds and turmoil. “Our revised guidance for the year incorporates the impact of industry headwinds in the first half, which we expect to continue in the second half of the year and we are taking the appropriate actions to adapt to this environment. We’ve now assembled a world class leadership team that is executing our transformation plan to significantly drive growth and long term shareholder value,” said Tom Greco, President and CEO. The downbeat guidance has sent Advanced Auto Parts’ competitors tumbling as well, as O’Reilly shares opened 3% down and AutoZone opened 4.5% under yesterday’s close.