Advance Auto Parts Inc (NYSE:AAP) Reports Q2 2025 Earnings Beat Amid Muted Market Reaction

Advance Auto Parts Inc (NYSE:AAP) reported second-quarter 2025 results that came in slightly above analyst expectations, though the market reaction has been muted in pre-market trading. The automotive aftermarket parts supplier posted revenue of $2.01 billion, narrowly beating the consensus estimate of $1.997 billion. Adjusted earnings per share of $0.69 surpassed the $0.58 analyst forecast, representing a 19.8% beat.

Key Financial Highlights

• Revenue Performance: The $2.01 billion in Q2 sales marks a 7.7% decline year-over-year but slightly exceeded expectations. Comparable store sales grew just 0.1%, indicating sluggish demand in both professional and DIY segments.
• Profitability: Adjusted operating income improved to $61 million (3.0% margin) from $62 million (2.8% margin) in Q2 2024, reflecting cost-cutting efforts. Gross margin expanded to 43.8% from 43.6% a year ago, driven by footprint optimization.
• Cash Flow Challenges: Free cash flow remained negative at -$201 million year-to-date, worse than the -$48 million outflow in the prior-year period.

Market Reaction

Shares dipped -0.3% in pre-market trading, suggesting investors remain cautious despite the earnings beat. The stock has gained 2.3% over the past week but is flat over the past month, reflecting uncertainty about the company’s turnaround progress.

Guidance vs. Analyst Expectations

Management reaffirmed full-year sales guidance of $8.4–$8.6 billion, aligning with the analyst consensus of $8.6 billion. Adjusted EPS guidance was revised to $1.20–$2.20 (from $1.50–$2.50 previously) due to higher interest expenses, now sitting below the $2.07 consensus.

Strategic Developments

CEO Shane O’Kelly highlighted stabilization in the DIY segment and Pro business growth, along with cost reductions from store closures (514 locations shuttered year-to-date). The company also declared a $0.25/share dividend, signaling confidence in liquidity despite weak free cash flow.

Looking Ahead

For Q3, analysts expect revenue of $2.02 billion and EPS of $0.85—Advance Auto Parts will need to show stronger comparable sales momentum to meet these targets.

For detailed earnings estimates and historical performance, visit Advance Auto Parts' earnings page.

Disclaimer: This article is not investment advice. Investors should conduct their own research or consult a financial advisor before making decisions.