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Advance Auto Parts’ Sales Improved in Q2 2018

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Advance Auto Parts’ sales

Advance Auto Parts (AAP) generates its revenues by selling auto parts and accessories mainly in the United States, Puerto Rico, Canada, and the US Virgin Islands. The company provides auto parts to DIY (do-it-yourself) customers and offers professional installation services.

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Sales recovered

In the second quarter, Advance Auto Parts reported revenues of $2.33 billion—up 2.8% from its revenues in the second quarter of 2017. The company also beat analysts’ consensus revenue estimates of $2.27 billion, which boosted investors’ confidence. The second quarter was the first time that Advance Auto Parts reported positive YoY (year-over-year) revenue growth after reporting YoY declines for three consecutive quarters. In the first quarter, Advance Auto Parts’ sales fell 0.6% YoY.

To add to the optimism, Advance Auto Parts’ same-store sales rose 2.8% during the second quarter. The comp sales fell 0.8% in the first quarter.

2018 could be better than 2017

During Advance Auto Parts’ second-quarter conference call, management mentioned that the company’s sales were boosted by “increased demand across many categories” in the second quarter. Management added that the company expects that the demand “will continue to positively impact AAP for the remainder of 2018.”

In 2017, Advance Auto Parts’ sales fell 2% YoY to $9.37 billion. The company’s same-store sales fell 2% in 2017 and 1.4% in 2016.

In the last three years, US automakers (FXD) including Ford (F) and General Motors (GM) benefited from higher US truck sales. However, the average age of vehicles on US roads has also increased in the last few years. The positive trend in vehicles’ average age boosted the future growth potential for US auto parts sellers including Advance Auto Parts, O’Reilly Automotive (ORLY), and AutoZone (AZO).

Next, we’ll discuss Advance Auto Parts’ profit margins in the second quarter.

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