Let’s review Advance Auto Parts Inc. (AAP), which just delivered $2.01 billion in revenues during the quarter, landing at the high end of prior guidance and beating consensus by about $33 million

Most importantly, this was driven by positive comp sales of +0.1%, an improvement from (0.6%) in Q1 and also at the high end of guidance. Adjusted earnings per share came in well ahead of expectations at $0.69 versus the Street’s $0.54.
 

Management continues to deliver on the profitability front, returning the business to overall profitability in the quarter with adjusted gross margins rising to 43.8%, up 16 basis points year-over-year. The most important metric in the turnaround, adjusted operating margins, expanded to 3%, up 19 bps YOY.

The Pro business, which is the biggest overall driver of AAP’s underlying performance, continues to show strength. It had positive comp growth in the low single digits during the quarter – and mid-single-digit growth on a two-year basis. Pro customers are showing increased confidence in AAP, as evidenced by sustained sales growth from both Main Street Pro accounts and large national customers.

Management also continues to work on tariff mitigation strategies, while prioritizing profit dollar expansion, with about 40% of cost of goods sold exposed to tariffs at a blended rate of around 30%. Most importantly, more than 90% of AAP’s business remains nondiscretionary, keeping the company well-positioned to navigate a higher-product-cost environment.

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