Leading retailer of automotive aftermarket parts, accessories, batteries and maintenance items Advance Auto Parts Inc announced its financial results for the second quarter ended July 12, 2008. Second quarter earnings per diluted share increased 23% to $0.79 versus $0.64 last year.

Second Quarter Highlights
Total revenue for the second quarter increased 5.6% to $1.24 billion, compared with revenue of $1.17 billion in the second quarter of fiscal year 2007. The revenue increase reflected the net addition of 138 new stores in the past 12 months and a comparable store sales increase of 2.9% during the quarter compared to an increase of 1.2% in the second quarter last year.

The comparable store sales gain was comprised of a 13.5% increase in commercial sales partially offset by a 0.8% decrease in do-it-yourself (DIY) sales. This compares to a 5.4% increase in commercial and a 0.2% decrease in DIY in the second quarter last year. Year-to-date comparable store sales increased 1.6% driven by an 11.9% increase in commercial sales partially offset by a 2.0% decrease in DIY.

The Company's gross profit rate was 48.6% in the second quarter as compared to 48.1% last year which reflects a 51 basis point improvement from the prior year. The 51 basis point improvement was primarily due to lower supply chain and logistics costs combined with more effective pricing.

The Company's second quarter selling, general and administrative (SG&A) expenses were 38.3% of sales compared to 38.0% last year. This 23 basis point increase was driven by increased incentive compensation, increased spending on strategic initiatives and higher gasoline expenses related to commercial deliveries. Partially offsetting the SG&A increases were cost savings realized from actions taken last year to reduce SG&A combined with expense leverage as a result of solid Q2 comparable store sales.

Net interest expense was $7.3 million in the quarter, compared to $6.9 million last year. The Company's current borrowing costs remain at approximately 5%.

Operating cash flow for the year increased $70.0 million to $350.0 million. Free cash flow for the year increased 25% to $244.6 million which reflects a $48.7 million improvement as compared to last year. Capital expenditures were $106.0 million for the year, as compared to $115.7 million last year. The decrease is primarily due to a reduction in new store development.

During the second quarter, the Company opened 36 stores bringing the total for the year to 70, closed two and relocated four stores. As of July 12, 2008 total store count is 3,325.

"Our Advance and AI Team Members' focus on delivering outstanding customer service continued to drive our financial results during the second quarter. The 22% year-to-date increase in earnings per diluted share reflects our Team Members' execution, progress on our four strategies and the benefit of share repurchases," said Darren R. Jackson, President and Chief Executive Officer.

Courtesy: Advance Auto Parts, USA

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Posted by Naresh Koshti on 7 August, 2008 10:59:10 AM IST #