Advance Auto Parts (NYSE:AAP) reported a challenging fourth quarter for fiscal year 2023, with a notable decline in earnings per share (EPS) but a slight revenue beat compared to analyst expectations. The company's Q4 EPS came in at a loss of -$0.59, significantly underperforming the consensus estimate of $0.21. However, revenue for the quarter reached $2.5 billion, exceeding the consensus estimate of $2.46 billion. AAP shares have risen 3.5%.
The automotive parts retailer's net sales for the fourth quarter saw a marginal decrease of 0.4% compared to the same period last year, with comparable store sales also dipping by 1.4%. Gross profit for the quarter fell to $950.8 million, or 38.6% of net sales, from 43.6% in the prior year's quarter, primarily due to inventory-related issues and increased supply chain costs. Operating loss was reported at $48.6 million, a stark contrast to the $119.3 million operating income in the prior year's fourth quarter.
For the full year 2023, Advance Auto Parts saw net sales increase by 1.2% from 2022, reaching $11.3 billion, although comparable store sales experienced a slight decline of 0.3%. The company's diluted earnings per share for the year stood at $0.50, a significant drop from the previous year's $7.65.
Looking ahead, the company has set its full-year 2024 net sales guidance in the range of $11.3 billion to $11.4 billion. This forward-looking statement reflects the company's efforts to reset the business and establish a stronger foundation for the future, as outlined by CFO Ryan Grimsland. The guidance range midpoint of $11.35 billion aligns with the company's focus on operational improvements and disciplined expense management.
Investors responded positively to the revenue beat, with the stock moving up by 3.5%. The company's performance in the fourth quarter was impacted by several factors, including a change in inventory-related items and elevated supply chain costs, as well as increased occupancy costs and store labor expenses. Despite the headwinds, the revenue beat and the company's commitment to refining its operational plans have provided a measure of confidence to the market.
Advance Auto Parts is working through the issues identified with certain previously reported financials and has filed a Form 12b-25 with the SEC, expecting to file its Form 10-K within the extension period. The company's financials for the quarter and the full year have been adjusted to correct non-material errors in previously reported results.