Shares of Advance Auto Parts Inc. AAP plunged 20.9% toward a three-year low in premarket trading Wednesday, after the autoparts seller reported a big fiscal first-quarter profit miss, slashed its full-year outlook and cut its dividend by 83.3%, as operating margin was well below expectations due to higher investments to narrow price gaps and unfavorable product mix. Net income for the quarter to April 22 dropped to $42.7 million, or 72 cents a share, from $139.8 million, or $2.26 a share, in the year-ago period. The FactSet consensus for earnings per share was a rise to $2.56. Sales grew 1.3% to $3.42 billion, just shy of the FactSet consensus of $3.43 billion, as same-store sales dropped 0.4% to miss expectations of a 0.5% rise. For fiscal 2023, the company cuts its guidance ranges for EPS to $6.00 to $6.50 from $10.20 to $11.20, for sales to $11.20 billion to $11.30 billion from $11.40 billion to $11.60 billion and for operating margin to 5.0% to 5.3% from 7.8% to 8.2%. “We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations,” said Chief Executive Officer Tom Greco. “We have reduced our full-year guidance and our board of directors made the difficult decision to reduce our quarterly dividend.” The new quarterly dividend of 25 cents a share, down from $1.50 a share, will be payable July 28 to shareholders of record on July 14. The stock has tumbled 23.7% year to date through Tuesday, while the S&P 500 SPX has gained 9.5%.
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