DOW JONES NEWSWIRES
Advance Auto Parts Inc.'s (AAP) fourth-quarter net income
dropped 30% on an inventory write-down, but strong commercial sales
and an extra week helped the company post a double-digit sales
increase.
The company said it intends to aggressively renegotiate rents
and move or close stores to improve profitability. Between 40 and
55 unprofitable stores could be closed in 2009.
"We are pleased with our commercial results and encouraged by
the improvement in our DIY [Do It Yourself] results during the
fourth quarter," said President Jim Wade.
He predicted the company could see double-digit growth in
commercial same-store sales in 2009, which would be partially
offset by a decrease in the low single digits in DIY same-store
sales.
While the recession has put the Detroit auto makers on life
support, the market for auto parts has been holding up as
cash-strapped Americans patch up their cars rather than shop for
new ones.
The second-largest U.S. auto-parts retailer, after AutoZone Inc.
(AZO), reported net income of $24.4 million, or 26 cents a share,
down from $34.8 million, or 35 cents a share, a year earlier.
Excluding an inventory write-down of 25 cents a share, earnings
rose to 51 cents a share. The extra week added 10 cents a share to
earnings.
Revenue climbed 14% to $1.19 billion, helped by 107 new stores,
the extra week and an increase in same-store sales.
Analysts' estimates were for per-share earnings of 37 cents on
revenue of $1.15 billion, according to a poll by Thomson
Reuters.
Same-store sales rose 3%, excluding the extra week, with sales
to do-it-yourself customers down 1.1% but sales to commercial
repair shops climbing 14%.
Gross margin fell to 45.4% from 47.1% on the inventory
write-down. Without the extra week, gross margin would have been
48.5%.
The company noted that the write-down is related to a change in
inventory management that is expected to increase inventory turns,
sales and margins.
During the fourth quarter, Advance opened 26 stores, closed 10
and moved two. As of Jan. 3, the total store count was 3,368.
Advance's shares were unchanged in after-hours trading from the
Wednesday closing price of $32.63, up 1.5%. The stock price has
fallen 28% in five months.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com