Comp light, but margins & FCF strong
AAP reported a -0.8% comp (consensus +0.3%). While this represented a sequential improvement from -2.6% in Q417, this was weaker on a two- and three-year stack. While March and April faced challenging weather, we were still hoping for a positive comp. Gross margins expanded 32bps YoY, while operating margins increased 71bps, representing the first quarter of expansion under the new CEO. This drove EPS $0.13 above consensus. FY18 guidance was not updated. We view this as sensible, so early in the year. Overall, encouraging margin trends, but the comp is light of expectations.Advance Auto Parts is an automotive aftermarket parts provider in North America, serving both professional installers (Professional), and do-it-yourself (DIY), customers as well as independently owned operators. The company's stores and branches provide a range selection of brand name, original equipment manufacturer and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. Through its integrated operating approach, the company serves its Professional and DIY customers through a variety of channels ranging from brick and mortar store locations to self-service e-commerce sites.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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