Advance Auto Parts reports Q2 2026 results, reaffirms full-year guidance

Advance Auto Parts (NYSE: AAP ) released second-quarter financial results and hosted an earnings call on Thursday.

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The full earnings call is available at Summary Advance Auto Parts reported a slight decline in comparable sales for Q2 2026, with the Pro channel showing low single-digit growth but DIY sales declining more than expected due to tighter household budgets.

The company achieved an adjusted operating margin of 5.6%, with significant margin expansion driven by strategic initiatives, despite facing headwinds from shifts in channel mix and increased commodity costs.

Advance Auto Parts reaffirmed its full-year guidance, expecting comparable sales growth in the 1% to 2% range and maintaining a focus on executing strategic priorities in merchandising, supply chain, and store operations.

The company completed a significant distribution center consolidation, reducing from nearly 40 to 15 DCs, and plans to accelerate Market Hub openings, aiming for 60 locations by mid-2027 to enhance same-day parts availability.

The company's adjusted gross profit margin expanded by 240 basis points, driven by tariff refunds and an improvement in product margin, despite challenges from higher freight and fuel costs.

Advance Auto Parts generated $120 million in free cash flow year-to-date, marking a return to positive cash flow after two years of outflows, and utilized $30 million to repurchase a portion of its outstanding debt.

Management remains confident in achieving a medium-term adjusted operating margin target of 7%, with plans for continued operational improvements and investments in strategic initiatives to drive long-term shareholder value.

Full Transcript OPERATOR Welcome to the Advance Auto Parts second quarter 2026 earnings conference call.

I would now like to turn it over to Lavesh Hemnani, Vice President, Investor Relations.

Lavesh Hemnani, Vice President, Investor Relations Good morning and thank you for participating in today's call.

I'm joined by Shane O'Kelly, President and Chief Executive Officer, and Ryan Grimsland, Executive Vice President and Chief Financial Officer.

During today's call we will be referencing slides which have been posted to our Investor Relations website.

Before we begin, please be advised that management's remarks today will contain forward-looking statements.

All statements other than statements of historical fact are forward-looking statements, including but not limited to statements regarding initiatives, plans, projections, goals, guidance and expectations for the future.

Actual results could differ materially from those projected or implied by the forward-looking statements.

Additional information can be found under Forward-Looking Statements in our earnings release and risk factors in our most recent Form 10-K and subsequent filings made with the SEC.

Shane will begin today's call with an update on the business and progress on our strategic priorities for 2026.

Later, Ryan will discuss results for the second quarter and provide an update on the guidance for full year 2026.

Following management's prepared remarks, we will open the line for questions.

Now let me turn the call over to our CEO, Shane O'Kelly.

Shane O'Kelly, CEO Thank you, Lavesh, and good morning, everyone.

I would like to start by expressing my appreciation for our frontline team for their hard work and dedication to serving our customers.

During the second quarter, the team navigated a volatile demand environment, which contributed to a slight decline in comparable sales.

This included low single-digit sales growth in the Pro channel, which performed in line with our expectations.

Within Pro, the Main Street business continued to outpace overall growth, supporting share gains in that segment.

In the DIY channel, sales declined more than we anticipated, particularly during the last four weeks, as tighter household budgets weighed on consumer spending during the quarter.

Against this backdrop, the Advance team continued to prioritize actions across our strategic initiatives, which contributed to solid profitability in Q2.

With an adjusted operating margin of 5.6%, excluding the benefit of IEEPA refunds received in the quarter, adjusted operating income margin expanded by nearly 130 basis points to 4.3%.

We maintain focus on executing actions within our control, which has translated to sequential improvement in core operational KPIs, including NPS, time to serve, and attachment rates.

The second quarter marked an inflection point for Advance with the return to positive free cash flow, as we generated $120 million year-to-date compared to an outflow of cash during the last two years.

During the quarter, we also repurchased approximately 30 million of outstanding debt, which, along with improved profitability, supported further deleveraging of the balance sheet while we continue to allocate more capital to investments to grow the business.

Based on our first-half performance and updated projections for the remainder of the year, we are reaffirming our full-year sales, operating margin, and free cash flow guidance.