Advance Auto Parts (AAP) Q4 2025 earnings summary

Executive summary

• Achieved positive comparable sales growth in FY25 after three years of declines, driven by operational transformation, customer-focused initiatives, and strategic execution.

• FY25 results met expectations, with significant progress in asset rationalization, sourcing, inventory management, and customer service.

• Expanded adjusted operating income margin by over 200 basis points year-over-year, reaching 2.5% for FY25.

• Leadership transitions, strengthened vendor relationships, and debt refinancing supported ongoing transformation.

Financial highlights

• Q4'25 net sales were ~$2B, down about 1% year-over-year due to store optimization; comparable sales grew 1.1%.

• FY25 net sales declined 5% to $8.6B; comparable sales grew just under 1%.

• Q4'25 adjusted gross profit margin was 44.2%, up over 500 basis points year-over-year; FY25 adjusted gross margin was 43.9%.

• Q4'25 adjusted operating income was $73M (3.7% margin), up 870 basis points year-over-year; FY25 adjusted operating income was $216M (2.5% margin).

• Adjusted diluted EPS for FY25 was $2.26, compared to a loss of $0.29 in FY24.

• Ended FY25 with free cash flow of -$298M, impacted by $140M in restructuring charges.

Outlook and guidance

• FY26 net sales guidance: $8.485B–$8.58B, with comparable sales growth of 1.0%–2.0%.

• Adjusted operating income margin expected at 3.8%–4.5%; adjusted diluted EPS projected at $2.40–$3.10.

• Free cash flow guidance for FY26 is approximately $100M; capital expenditures planned at ~$300M.

• 40–45 new store openings and 10–15 market hub openings planned.

• Medium-term target remains 7% adjusted operating income margin, with at least 100 basis points of expansion expected in 2027.