Advance Auto Parts Cuts Outlook as It Takes on New Debt

Paul Weaver / SOPA Images / LightRocket via Getty Images Advance Auto Parts exceeded profit and sales estimates in the second quarter

Key Takeaways

Advance Auto Parts cut its earnings outlook as it entered a new $1 billion credit facility. The auto parts retailer's new loan runs for five years. Advance Auto Parts exceeded profit and sales estimates in the second quarter.

Advance Auto Parts (AAP) shares shifted into reverse Thursday when the auto parts retailer lowered its profit guidance as it took on a new $1 billion loan.

The company now sees full-year adjusted earnings per share (EPS) in the range of $1.20 to $2.20, compared to its previous outlook of $1.50 to $2.50.

Advance Auto Parts announced in a regulatory filing that it had "entered into a new five year senior secured first lien asset based revolving credit facility" that provides for an extension of credit of up to $1 billion. It noted it "has a first lien on substantially all the accounts receivable, inventory, certain deposit accounts and certain related assets of the borrower and guarantors," and replaces a previous facility.

The news offset better-than-expected second-quarter results. The company posted adjusted EPS of $0.69, while analysts surveyed by Visible Alpha were looking for $0.55. Even though revenue fell nearly 8% year-over-year to $2.01 billion, that also topped forecasts.

Comparable store sales gained 0.1%, which CEO Shane O'Kelly credited to growth in Advance Auto Part's Pro business, and added that "we are encouraged by the early signs of stabilization in our DIY business."

Despite today's 15% decline, shares of Advance Auto Parts remain up about 12% in 2025. TradingView

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