RICHMOND, Va. (AP) â¿¿ Advance Auto Parts said Thursday that its second-quarter net income fell almost 12 percent as the car parts retailer's revenue slipped. Its results missed expectations and the company slashed its earnings guidance for the year.
CEO Darren R. Jackson said that high unemployment and low consumer confidence have hurt consumer spending, and anticipates "sluggish" demand in the second half of the year.
The seller of batteries and other auto parts has found "consumers were only willing to spend the absolute minimum amount on failure-related parts and were willing to defer maintenance purchases," Jackson said in a conference call.Company shares fell $1.24, or 1.8 percent, to $69.32 in morning trading after sinking as low as $66.87 in earlier trading. Its shares are down 26 percent from their 52-week high of $93.08 per share set in late April. Advance Auto Parts Inc. has been focused on streamlining and simplifying its organization to reduce costs and minimize the impact to sales and service levels. 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. The industry has expected to benefit from the rising average age of vehicles on the road, lifting do-it-yourself sales. But rising gas prices â¿¿ and the slow economic recovery â¿¿ have hindered growth. Mild early spring weather also hurt auto parts retailers, because it meant less wear and tear on vehicles and less consumer spending on parts to fix them. The Roanoke, Va.-based company reported net income of $99.6 million, or $1.34 per share, for the three-month period ended July 14, compared with $113.1 million, or $1.46 per share, a year ago. Revenue fell 1.3 percent to $1.46 billion from $1.48 billion a year ago. The company had cautioned in May that there had been a slow start in the second quarter.