UPDATE: Advance Auto Parts (AAP) Misses Q3 EPS by 14c; Trims FY15 EPS Outlook; Appoints Interim CEO

(Updated - November 12, 2015 6:51 AM EST)

Advance Auto Parts (NYSE: AAP) reported Q3 EPS of $1.95, $0.14 worse than the analyst estimate of $2.09. Revenue for the quarter came in at $2.3 billion versus the consensus estimate of $2.33 billion.

The sales increase was driven by the addition of new stores over the past 12 months and a comparable store sales increase of 0.5% partially offset by changes in our independent store count. Our comparable store sales were negatively impacted by 47 basis points due to foreign currency fluctuations from our Canadian operations.

Leadership Transition:

AAP also announced that its Board of Directors has appointed President George Sherman to the additional role of interim Chief Executive Officer, effective January 3, 2016, the beginning of the Company’s next fiscal year. Mr. Sherman will succeed Darren Jackson who will retire as CEO and step down from the Board on January 2, 2016, after more than 11 years with the Company, including the last eight years as CEO.

The Company also announced that effective immediately current Board Chairman John C. (“Jack”) Brouillard will become Executive Chairman. In this role, Mr. Brouillard will continue to provide Board leadership and work closely in an advisory capacity with Mr. Sherman as the Company continues to implement its long-term strategy. The Board also named Board Member John Ferraro to take on the role of Lead Independent Director.

Mr. Brouillard said, “Since joining Advance Auto Parts nearly three years ago, George Sherman has demonstrated a range of important skills through his efforts to expand our Commercial business, improve operations and oversee the integration of General Parts. We are confident that George’s understanding of our business, strong customer relationships, and proven leadership abilities position him well to lead the Company through this transition period. As part of our search process, the Board will consider external candidates as well as George for the role of permanent CEO.”

Mr. Brouillard continued, “On behalf of the Board, I want to thank Darren Jackson for his extraordinary service to Advance Auto Parts. During his eight years as CEO, Advance has doubled in size while growing its market value over $10 billion and increasing its share price from $33 to $195. Darren’s leadership and commitment to excellence have transformed Advance into an industry leader that is well positioned strategically, operationally, and financially to capitalize on the opportunities that lie ahead.”

Mr. Sherman said, “I am honored to have the opportunity to lead Advance Auto Parts during this interim period. With increased scale and reach, including loyal do-it-yourself customers and an expanding presence in the fast-growing commercial segment, we are well positioned to drive growth and achieve our margin targets. I look forward to continuing to work closely with our talented executives and the thousands of hard-working Advance team members as we build value for our shareholders, customers and team.”

Mr. Jackson said, “It has been a privilege to lead this great Company. Advance Auto Parts is well positioned to build upon its position as a leading automotive aftermarket parts provider, and I am confident George will successfully guide Advance during this interim period in continuing to implement its strategic plan.”

George Sherman Biography

Mr. Sherman joined Advance Auto Parts as President in April 2013, and has been responsible for growing the business and driving excellence throughout the Company’s operations. Mr. Sherman has led the Company’s Commercial Sales, Field Operations, Merchandising, Marketing, Supply Chain and IT Teams. Prior to joining Advance Auto Parts, Mr. Sherman served as Senior Vice President, Best Buy Services, for Best Buy Co. Previously, Mr. Sherman led Home Depot’s installation business as Senior Vice President and President of the Home Services Division, as well as serving as Senior Vice President, Operations. Prior to Home Depot, Mr. Sherman spent 15 years at Target Corp., where he progressed from Store Manager to Regional Vice President to Senior Vice President. Previously, he served as an officer in the United States Air Force for seven years.

Jack Brouillard Biography

Mr. Brouillard joined the Advance Auto Parts Board in 2004 and was appointed Chair in January 2008 after serving as interim Chief Executive Officer from May 2007 until January 2008. Mr. Brouillard retired as Chief Administrative and Financial Officer of H.E. Butt Grocery Company in June 2005, a position that he had held since 1991. From 1977 to 1991, he held various positions with Hills Department Stores, including serving as President.

John Ferraro Biography

John Ferraro joined the Advance Auto Parts Board in 2015. Mr. Ferraro was Global Chief Operating Officer of Ernst & Young (EY) from 2007 to December 2014. He joined EY in 1976 and was a partner for 26 years until his retirement in February 2015, holding various positions of senior responsibility including Global Vice Chair Audit and was a member of EY’s Global Executive board for more than 10 years.

Guidance:

Advance Auto Parts sees FY2015 EPS of $7.75-$7.90, versus the consensus of $8.28.

For earnings history and earnings-related data on Advance Auto Parts (AAP) click here.

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