Advance Auto Parts shares drop as 4th-quarter results disappoint investors

Advance Auto Parts falls as 4Q results disappoint

ROANOKE, Va. — Shares of Advance Auto Parts Inc. fell Thursday after the retailer reported fourth-quarter earnings that disappointed Wall Street.

Shares fell $2.60, or 6.1 percent, to $40.28 in afternoon trading. They have traded in a 52-week range of $31.83 to $47.41.

Late Wednesday, the company reported adjusted profit of 39 cents per share, excluding the impact of store closures and other items. The company posted comparable profit of 41 cents per share in the same quarter of 2008.

Analysts polled by Thomson Reuters had expected income of 46 cents per share in the latest quarter.

Craig Kennison, an analyst with Robert W. Baird & Co., said commercial business was robust, growing nearly 10 percent in the period. But Kennison was troubled that sales to do-it-yourself customers, which account for 70 percent of the retailer’s revenue, continued to lag. Do-it-yourself business fell by 0.8 percent in the quarter.

“Do-it-yourself sales need to recover before investors gain confidence, in our view,” Kennison wrote in a note to investors.

In a conference call with investors Wednesday, Advance Auto Parts President Jim Wade said the company is moving toward a 50-50 split between commercial and do-it-yourself business. The company said it also is changing staffing in stores and improving parts distribution to try to boost do-it-yourself sales.

Kennison said that since a quarter of the retailer’s stores are in the Northeast and Mid-Atlantic, sales in the first part of 2010 will be hurt by recent snowstorms. But he said he still sees value in the shares for investors because of the company’s solid cash flow and favorable industry trends, including aging vehicles that will need more repairs and growth in independent car repair shops.