Advance Auto Parts tanks after cutting guidance

Advance Auto Parts tanked on Wednesday after the US car parts retailer slashed its quarterly dividend, cut its annual earnings guidance and posted weaker-than-expected first-quarter results.

First-quarter diluted earnings per share fell to $0.72 from $2.26 in the same period a year earlier, missing expectations of $2.57. Meanwhile, net sales ticked up 1.3% to $3.4bn.

The company declared a dividend of $0.25 per share, down from $1.50.

Citing higher-than-expected costs and inflationary pressures, Advance Auto said that for FY23, it now expects net sales of $11.2bn to $11.3bn, down from previous guidance of between $11.4bn and $11.6bn. Diluted EPS is now seen at between $6.00 and $6.50, down from previous guidance of $10.20 to $11.20.

President and chief executive Tom Greco said: "While we anticipated the first quarter would be challenging, our results were below our expectations.

"We remain focused on improving inventory availability while sustaining competitive price targets to improve topline sales. We expect the competitive dynamics we faced in the first quarter to continue, resulting in a shortfall to our 2023 expectations. We have reduced our full-year guidance and our board of directors made the difficult decision to reduce our quarterly dividend."

At 1540 BST, the shares were down 32% at $75.32.