What happened 

Shares in automotive aftermarket retailer parts retailer Advance Auto Parts (AAP 1.01%) are down an incredible 38% in the week to midday on Thursday, according to data provided by S&P Global Market Intelligence. The move comes after a disappointing earnings release on Wednesday that led to a slump in the share price and a slew of analyst downgrades a day later.

So what

The developments are significant. Not only did Advance report results below expectations, but management also cut its full-year guidance, and the board of directors slashed the quarterly dividend from $1.50 to $0.25. After reporting a 0.4% decrease in comparable-store sales in the first quarter, management now expects full-year compare store sales to be in the range of a 1% decline to flat in 2022, compared to prior guidance for growth of 1% to 3%.

An operating margin of 2.6% was "well below expectations," according to CEO Tom Greco. He put it down to "higher-than-planned investments to narrow competitive price gaps in the professional sales channel, as well as unfavorable product mix."

Now what

Perhaps the most positive take on matters is that management might be taking action to throw the kitchen sink at its earnings before Greco's retirement at the end of the year. However, a more negative, and perhaps realistic, appraisal is that Advance has consistently failed to match the operating metrics of its peers.

In a familiar refrain, Greco talked of being "focused on improving inventory availability," and CFO Jeff Shepherd said, "We are committed to improving our operational performance."

Making the right inventory readily available in stores is a key part of the time-sensitive auto parts retail business, as is improving operational performance, notably on margins. Indeed, the opportunity for Advance to play catch-up on these matters enticed activist investor Starboard Value to build a position in 2015.

However, Starboard exited its position in 2021, and investors would have been wise to follow, as there's been a minimal tangible improvement on Advance's key operational metrics over the years. There's no good reason to buy the stock until Advance Auto Parts' management demonstrates improvements.