Advance Auto Parts accumulates 33% after cutting forecasts and dividend

Advance Auto Parts (AAP) closed a whopping 35% on Wednesday after the company cut its full-year guidance and cut its dividend.

The auto parts retailer posted adjusted earnings per share of $0.72 in the first quarter, significantly missing Wall Street’s consensus estimate of $2.65. The company also posted revenue of $3.4 billion, missing Street’s estimate of around $3.4 billion.

“Although we anticipated the first quarter to be challenging, our results were below our expectations,” Tom Greco, CEO of Advance Auto Parts, said in the company’s earnings release. “We expect the competitive momentum we faced in the first quarter to continue, resulting in a shortfall against our 2023 expectations. We have reduced our full-year guidance and our Board of Directors has taken the difficult decision to cut our quarterly dividend.”

The company now sees its FY2023 EPS guidance in the range of $6.00 to $6.50, down from its previous guidance of $10.20 to $11.20, representing a 40% reduction in its prospects.

Advanced Auto Parts also cut its quarterly dividend to $0.25 per share from $1.50 previously, which the company says will “provide increased financial flexibility.”

The company also expects its free cash flow for the full year to be between $200 million and $300 million, down from its previous guidance of $400 million. The auto parts retailer also cut its target for full-year store openings to 40 to 60 from a previous expectation of 60 to 80.

Shares of peers O’Reilly Automotive (ORLY) and AutoZone (AZO) also closed lower on Wednesday, each losing nearly 3%.

Ines is a senior economics reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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