Advance Auto Parts, Inc.
- Company Name
- Advance Auto Parts, Inc.
- Stock Symbol
- Class Period
- November 14, 2016 to August 15, 2017
- Motion Deadline
- April 7, 2018
- District of Delaware
The complaint charges Advance Auto and certain of its officers with violations of the Securities Exchange Act of 1934. Advance Auto is a leading automotive aftermarket parts provider in North America that serves professional installers, independently owned operators and do-it-yourself retail customers. The Company’s stores sell OEM and private label automotive replacement parts, accessories, batteries and maintenance items.
On January 2, 2014, Advance Auto announced it had completed the acquisition of General Parts International, Inc., which was a “leading privately held distributor and supplier of [OEM] and aftermarket replacement products . . . operating under the CARQUEST and WORLDPAC brands” (the “Carquest Acquisition”).
The complaint alleges that during the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Advance Auto’s business, operations and prospects. Specifically, the complaint alleges that defendants concealed or misrepresented information regarding integration issues surrounding Advance Auto’s Carquest Acquisition, which had resulted in systemic inefficiencies and cannibalization of sales, and that increased competition was negatively impacting Advance Auto’s sales. As a result of defendants’ misrepresentations and/or failure to disclose this information, Advance Auto securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of $176.78 per share.
On May 24, 2017, Advance Auto announced disappointing first quarter 2017 financial results, including a quarterly sales decrease of 3%, a decrease in gross profits and a decline in comparable store sales of 2.7%. This caused the price of Advance Auto stock to fall over 5% to $133.02 per share.
Then on August 15, 2017, Advance Auto reported disappointing second quarter 2017 financial results and disclosed that “[c]omparable store sales for the quarter were flat.” In addition, the Company decreased its financial and operational guidance for full-year 2017, including decreasing its comparable store sales guidance from 0%-2% to negative 3%-1%. The Company’s CEO stated in a conference call following the announcement that the Company was “still in the early phases of [a] turnaround. . . . [T]he historic lack of investment in the customer needed to be rectified. We lacked a coherent strategy. Our frontline turnover was unacceptable. Our technology platforms were segregated and difficult to navigate, and our supply chain infrastructure was duplicative and siloed. All of these created a suboptimal experience for both customers and team members and was the primary reason our top line underperformed versus our competitive set by a wide margin for years. Simply put, we were an easy share donor for our competitors.” On this this news, the price of Advance Auto stock fell $22.24 per share, or over 20%, to close at $87.08 per share on August 15, 2017