"We are now introducing our goal to deliver approximately 7% adjusted operating income margin by the end of fiscal 2027." - Shane O'Kelly, CEO
— Shane O'Kelly
03Detailed Report
AAP
Advance Auto Parts Inc
Period
Q3 2024
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedMay 24, 2026
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Executive Summary
In Q3 2024, Advance Auto Parts Inc (AAP) faced significant headwinds, reflecting a challenging consumer environment impacted by macroeconomic factors and operational disruptions. The company reported net sales of $2.1 billion, reflecting a 3% decline from the previous year, with comparable store sales down 2.3%
. Despite these setbacks, management expressed confidence in their strategic path to achieve an adjusted operating margin of approximately 7% by 2027, driven by internal improvements in merchandising, supply chain efficiency, and store productivity. The recent sale of its Worldpac business has added substantial liquidity, but the company must navigate the challenges posed by reduced consumer spending and operational disruptions caused by hurricanes and a notable system outage.
Key Performance Indicators
Revenue
Decreasing
2.15B
QoQ: -19.94% | YoY: -36.94%
Gross Profit
Decreasing
907.90M
42.27% margin
QoQ: -18.52% | YoY: -36.47%
Operating Income
Decreasing
403.00K
QoQ: -99.44% | YoY: -99.53%
Net Income
Decreasing
-6.01M
QoQ: -113.37% | YoY: -115.03%
EPS
Decreasing
-0.10
QoQ: -113.33% | YoY: -114.93%
Revenue Trend
Margin Analysis
Financial Highlights
### Financial Performance
- Revenue: $2.1 billion, down 3% YoY
- Gross Profit: $908 million, gross profit margin of 42.3%, an improvement of 540 basis points YoY
- Operating Income: $403,000, an 80 basis point margin, improved from negative 3.3% last year
- Net Income: -$6.0 million, EPS loss of $0.10
- Adjusted EBITDA: $52.6 million with margins forecasted to reach 2-3% for FY2025
### Liquidity and Financial Position
- Cash Position: Approximately $2 billion post-Worldpac sale
- Total Debt: $3.8 billion, representing a leverage ratio of ~4x, targeted to reduce to 2.5x by 2027
- Cash Flow from Operations: Positive net cash of $70.1 million during Q3
### Comparative Metrics vs Competitors
- Debt to Equity Ratio: 1.466, indicating reliance on leverage compared to industry peers
- Gross Profit Margin Comparison: AAP at 42.3%, AZO at 53.5%, TSCO at 33.9%
- Operating Margin Comparison: AAP at 0.02%, AZO at 21.3%, TSCO at 9.4%
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
2.15B
-36.94%
-19.94%
Gross Profit
907.90M
-36.47%
-18.52%
Operating Income
403.00K
-99.53%
-99.44%
Net Income
-6.01M
-115.03%
-113.37%
EPS
-0.10
-114.93%
-113.33%
Key Financial Ratios
Gross Profit Margin
Good
42.30%
Gross profit margin is healthy and competitive within industry standards
Operating Profit Margin
Weak
0.02%
Operating margin is below industry norms, profitability concerns
Net Profit Margin
Weak
0.00%
Net profit margin is below industry norms, profitability concerns
Return on Assets
Weak
0.00%
Return on assets suggests inefficient capital allocation
Return on Equity
Weak
0.00%
Return on equity suggests inefficient capital allocation
Current Ratio
Adequate
1.34
Current ratio meets minimum requirements but limited cushion
Debt to Equity
High Risk
1.47
Debt-to-equity indicates high leverage and elevated financial risk
P/E Ratio
Negative
-95.99x
Negative earnings make P/E ratio not meaningful
Price to Book
Undervalued
0.89x
Trading below book value, potential value opportunity or distressed
Management Insights Available for Members
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