Advance Auto Parts 4Q profit falls 2 percent

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RICHMOND, Va. (AP) — Advance Auto Parts Inc. said Thursday that fourth-quarter net income fell 2 percent, as lackluster sales were offset by higher supply costs and growth-related expenses.

The results beat Wall Street expectations and its shares rose more than 7 percent in morning trading.

The Roanoke, Va., seller of auto parts and batteries earned $65.1 million, or 88 cents per share, for the period ended Dec. 31, down from $66.4 million, or 90 cents per share, a year ago.

Advance Auto Parts, which operates nearly 3,795 stores in the U.S., Puerto Rico and the Virgin Islands, said revenue increased slightly to $1.33 billion.

Analysts polled by FactSet expected earnings of 75 cents per share on revenue of $1.33 billion.

The stock rose $5.10, or 7 percent, to $78 in midday trading.

Sales at stores open at least a year fell by nearly 2 percent. That's an important measure for retailers because it excludes results from newly opened or closed stores. The company opened 67 stores during the quarter and 137 stores in its fiscal year, the largest number in the last five years.

Advance Auto Parts has faced weak demand from do-it-yourself and commercial customers. Consumer spending has been crimped by volatile gas prices, and the company has experienced softer sales in cold-weather markets.

The fourth quarter brought to a close a "very challenging year," CEO Darren R. Jackson said in a conference call with investors.

When vehicle sales tumbled a few years ago, auto parts retailers such as Advance Auto Parts got a sales boost, as more Americans kept their vehicles longer and invested more in keeping them running. But Americans have been buying new cars and trucks at a healthy pace in recent months, fueled by low interest rates and aging cars that need replacement. Americans also are feeling better about the economy and jobs, key drivers of sales.

Jackson said looking ahead the industry expects a gradual increase in the number of vehicles seven years and older, along with a record level of deferred maintenance.

Advance Auto Parts has been focused on streamlining and simplifying its organization to reduce costs and minimize the impact to sales and service levels.

Selling, general and administrative expenses grew more than 2 percent and made up a larger part of its sales for the quarter as the company opened new stores and a distribution center in Indiana, and booked acquisition-related costs.

Advance Auto Parts said its full-year earnings fell about 2 percent to $387.7 million, or $5.22 per share. Revenue increased less than 1 percent to $6.2 billion as sales at stores open at least a year were relatively flat.

The company also said Thursday that it expects full-year fiscal 2013 adjusted earnings per share of $5.45 and $5.60, with comparable-store sales growth in low single digits. It also expects its acquisition of New York-based parts supplier B.W.P. Distributors Inc. that closed Dec. 31 to have a positive impact on revenue. Analysts polled by FactSet expect earnings of $5.57 for the year.

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Michael Felberbaum can be reached at http://www.twitter.com/MLFelberbaum .

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