Advance Auto Parts Raises 2026 Free Cash Flow Outlook

The Tip Desk · November 7, 2026 · 4 min read

The parts retailer lifted full-year free cash flow guidance to about $150 million after comparable sales turned positive in the final four weeks of the third quarter.

Advance Auto Parts, Inc. (AAP), a North American automotive aftermarket parts provider, raised its full-year 2026 free cash flow outlook to approximately $150 million from about $100 million, a year-over-year increase of more than $400 million, after comparable sales turned positive in the final four weeks of the third quarter.

Net sales for the twelve weeks ended October 10, 2026 were $2,012 million, compared with $2,036 million a year earlier. Comparable store sales declined 1.2% for the quarter, after a 0.5% decline in the second quarter and a 3.5% increase in the first. President and chief executive officer Shane O’Kelly said sales fell in the low-single-digit range during the first eight weeks before turning positive in the final four weeks, supported by improved transaction volumes.

The Pro channel led the quarter with low-single-digit sales growth, including stronger Main Street Pro growth. The DIY channel declined in the low-single-digit range for the full quarter, with trends recovering from negative mid-single-digit levels at the start of the period. O’Kelly said comparable sales performance improved as the quarter progressed and that DIY trends improved compared with the softer trends experienced during the summer.

GAAP operating income was $47 million, or 2.3% of net sales, versus $22 million, or 1.1%, in the third quarter of 2025. Adjusted operating income was $91 million, or 4.5% of net sales, compared with $90 million, or 4.4%, a year earlier. The adjusted margin had been 5.6% in the second quarter. Diluted earnings were $0.25 a share, versus a loss of $0.02 a year earlier. Adjusted diluted earnings were $0.79 a share, compared with $0.92.

Gross profit was $897 million, or 44.6% of net sales, compared with $881 million, or 43.3%, in the third quarter of 2025. Adjusted gross profit was $899 million, or 44.7%, versus $913 million, or 44.8%, a year earlier. The company said the decrease in gross profit as a percentage of net sales compared with the year-ago quarter was primarily driven by changes in product and channel sales mix and supply chain expense deleverage.

SG&A expenses were $850 million, or 42.2% of net sales, compared with $859 million, or 42.2%, a year earlier. Adjusted SG&A was $808 million, or 40.2%, versus $823 million, or 40.4%. The company attributed the lower SG&A as a percentage of net sales primarily to a reduction in expenses compared with last year, supported by disciplined expense management.

Restructuring and related expenses were $42 million in the third quarter, compared with $33 million a year earlier. The non-GAAP reconciliation included $38 million of impairments and write-downs of assets, comprising $2 million of incremental accelerated depreciation and amortization and $36 million of impairment charges for property and equipment and right-of-use assets, net of gains on sale.

The company generated over $100 million of free cash flow year-to-date through the third quarter ended October 10, 2026, O’Kelly said. Cash and cash equivalents were $3,085 million at quarter-end. Inventories were $3,789 million. Long-term debt was $3,039 million, with $349 million in the current portion. The company declared a regular cash dividend of $0.25 a share, payable January 22, 2027.

Advance revised other full-year 2026 guidance. Net sales are now expected at approximately $8,500 million, from a prior range of $8,485 million to $8,575 million. Comparable store sales for the 52-week year are set at approximately 1.00%, from a prior range of 1.00% to 2.00%. Adjusted operating income margin guidance was revised to 4.00% to 4.30% from 3.80% to 4.50%. Adjusted diluted EPS is now $2.75 to $3.10, from $2.60 to $3.30. Capital expenditures remain at approximately $300 million. The company plans 30 to 35 new store openings and 15 to 20 market hub openings.

As of October 10, 2026, Advance operated 4,325 stores primarily in the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands, and served 787 independently owned Carquest branded stores.