Automotive aftermarket retailer Advance Auto Parts (NYSE: AAP) announced its first-quarter results last week. The Virginia-based retailer reported a 13.4% year-over-year increase in EPS.
The quarter's results were below what the company expected, but its growth plans do put it in a strong place for the rest of the year. Fools should take notice. We could be looking at stronger trends for the automotive industry across the board.
A brief look at the numbers
Revenues in the first quarter increased 3.7% year over year, to $1.89 billion. Revenues have been looking up, mostly thanks to the addition of about 138 stores over the last 12 months. Same-store sales were a meager 1.4%. Despite the sales gain, net income was almost unchanged from a year ago, at $109.6 million.
Despite not such a great start to the year, Advance Auto has given a positive annual outlook, predicting EPS of $4.60 to $4.80. This year, it has increased its focus on service and plans to deliver on its "service is our best part" promise.
The auto industry revs up
The demand for fuel-efficient cars is climbing right now as oil prices have been soaring through the roof. According to a recent A.T. Kearney report, 13.2 million cars are expected to be sold in the U.S. this year. That number is expected to jump to almost 16 million in the next two years, the report says. We can expect this to benefit aftermarket part retailers as the years roll on.
Advance and peers O'Reilly Automotive (Nasdaq: ORLY) and AutoZone (NYSE: AZO) should benefit from a higher number of cars on the road as the year progresses. Both of Advance's peers have had a strong start to the year and will look to carry that momentum forward into the rest of the year as the industry continues to grow.
The Foolish bottom line
The company expects same-store sales to grow in the low single digits for the rest of the year, but it has taken steps to reduce costs. Though the start to the year for Advance Auto wasn't the greatest, its positive outlook for the year should definitely boost shareholders' confidence in the company.
