Advance Auto Parts’ business
Advance Auto Parts (AAP) generates its revenues by selling auto parts and accessories primarily in the US, Puerto Rico, the US Virgin Islands, and Canada. The company provides these auto parts to do-it-yourself customers as well as for professional installation purposes.
In 2015 and 2016, US automakers (FXD) such as Ford (F) and General Motors (GM) benefited from higher US truck sales. This positive trend also boosted future growth potential for US auto parts sellers including Advance Auto Parts, O’Reilly Automotive (ORLY), and AutoZone (AZO). Now, let’s take a closer look at Advance Auto Parts’ 2Q17 revenues.
2Q17 revenues were flat
In 2Q17, AAP reported flat revenues of $2.3 billion with minor gains of 0.3% from its revenues in the corresponding quarter of 2016. The company’s management mentioned that Advance Auto Parts’ 2Q sales performance has been better than other industry players. However, the management also warned investors that AAP’s sales would likely remain weak in the second half of 2017 due to industry-wide temporary softness. It’s important to note that auto part retailer sales saw early signs of weakness in the first half of 2017.
Recently, Advance Auto Parts has begun to reduce its inventories to improve its free cash flow condition. Despite these inventory reduction efforts, AAP has been focusing on improving auto part availability at stores and providing better customer service in order to improve its sales.
Read on to the next part where we’ll explore how Advance Auto Parts’ profit margins were in 2Q17.