AAP Advance Auto Parts

Advance Auto Parts Inc. reported its profit fell 7.2% in the most recent quarter as sales skidded on availability and service shortfalls.

Results were worse than expected and shares, which have fallen 6% over the past 12 months, lost another 9.6% premarket to $129.99.

"Our first quarter results did not meet our expectations," said Chief Executive Tom Greco, who took the helm last month.

The seller of automotive parts named Mr. Greco, a former PepsiCo Inc. executive, its CEO as it works to increase profitability under activist investor pressure.

"I am confident our focus and commitment around delivering improved service for our customers will translate into increased profitability and shareholder value," said Mr. Greco.

Starboard Value LP, whose stake in the company was revealed in September by The Wall Street Journal, has pushed the company to improve its bottom line, which the hedge fund has said trails peers AutoZone Inc. and O'Reilly Automotive Inc. In November, Advance Auto, by the New York hedge fund's urging, said then-chief executive Darren Jackson would retire in January.

Those moves came after Starboard built a stake in Advance Auto and said the company didn't do a good enough job of stocking its shelves every day, which the fund said can cost it sales.

On Thursday, Mr. Greco said "we are moving forward with urgency to drive improved performance."

"We are elevating our intensity to get the right parts to the right place at the right time," he said.

For the first quarter, the company said it earned $158.8 million, or $2.14 a share, up from $148.1 million, or $2 a share, a year earlier. Results were dented 11 cents a share by amortization of acquired intangible assets and 26 cents a share by integration and restructuring costs, primarily associated with the acquisition of General Parts International Inc. Excluding those items, adjusted earnings rose to $2.51 a share from $2.39 but below analysts' forecasts for $2.60 a share.

Revenue slipped 1.9% to $2.98 billion—below analysts' expectations for $3 billion—driven by a 1.9% decrease in same-store sales due to availability and service shortfalls as well as lower demand due to unfavorable weather.

Gross margin narrowed to 45.3% from 45.9% in the quarter a year ago, mostly the result of comparable-store sales declines.

On Wednesday, Advance Auto said Starboard CEO Jeffrey Smith, who was appointed to its board as part of the November deal, was named chair.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

May 19, 2016 07:45 ET (11:45 GMT)

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