Advance Auto Parts Inc: Foundation Taking Shape

研报英文原文证据摘录

Advance Auto Parts Inc: Foundation Taking Shape

. The gross margin beat (~45.1% vs. Street at ~44.7%) is important as it Quarter 2025 Prior Current Prior Current

signals initial progress against the ~500 bps margin opportunity, with roughly half Q1 (0.22) - 0.77a - -

Q2 0.69 0.82 0.74 - -

tied to product/pricing/sourcing initiatives. That said, execution risk persists, Q3 0.92 0.88 0.76 - -

particularly as AAP navigates a more volatile consumer backdrop, faces tougher Q4 0.86 0.57 0.42 - -

compares in 2H’26, and pricing-related benefits roll off. e = Morgan Stanley Research estimates, a = Actual Company reported data

What did we draw that was not explicitly stated?

1. Comp performance constructive. Q1 comps (+3.5% vs. Street at +2.2%) exceeded

inflation (~3%) and aligned with broader aftermarket peers (GPC also posted ~3%).

While this implies roughly flat unit volumes, stronger transaction counts across

both DIY/DIFM channels point to stable underlying demand. Although implied

growth slows through the remainder of the year (to ~0.6% for Q2–Q4), we view the

decision to maintain guidance as prudent given 1) near-term consumer volatility, 2)

typical “shoulder season” softness between tax refund spending and peak summer

driving, and 3) the beginning of lapping pricing-related tailwinds (in the back half of

2Q). We believe the unchanged outlook embeds a degree of conservatism, with

QTD trends tracking near the lower end of the comp framework (~1%) as tax refund

benefits fade and AAP enters a period of typical seasonal slowdown. Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,

2. Gross margin framework gaining credibility. AAP has sustained an average investors should be aware that the firm may have a conflict of