Advance Auto Parts (NYSE:AAP) signaled a decisive turn in its multi-year recovery effort, reporting fourth-quarter results that swung from a massive prior-year loss to positive territory.
The North American automotive parts provider benefited from a 53rd week of operations and the aggressive pruning of its store footprint under a comprehensive 2024 restructuring plan.
The company reported fourth-quarter net sales of $2 billion, remaining flat year-over-year.
However, the underlying health of the business showed marked improvement; comparable store sales—which strip out the impact of closed locations and the extra week—grew by 1.1%.
This modest top-line growth was amplified by significant cost-saving measures and strategic sourcing initiatives that have begun to stabilize the bottom line.
Profitability metrics saw the most dramatic shift.
Gross profit for the quarter rose to $0.9 billion, or 44% of net sales, a sharp climb from the 17.4% reported in the same period of 2024.
This expansion was driven by the "cycling of atypical items" related to the previous year's restructuring charges and operational efficiencies gained from closing underperforming stores in early 2025.
The quarter’s bottom line also reflected a successful pivot.
While operating income was reported at $44 million, compared to a staggering $820 million loss a year ago, adjusted diluted EPS came in at $0.86, reversing a $1.18 loss in the prior-year period.
Additionally, SG&A expenses dropped to 41.8% of net sales, down from 58.5% in Q4 2024.
Investors are now looking toward the full-year 2026 guidance, as Advance Auto Parts attempts to bridge the gap between its current recovery and its long-term target of an approximately 7% adjusted operating margin by 2027.