'The consumer is stressed': Advance Auto Parts plunges 25% on 2Q26 earnings

Shares of mid cap Advance Auto Parts plunged around 25% on Thursday to their lowest level since January. U.S. household spending weakened more than expected, causing the company’s comparable sales to decline in the second quarter. “The consumer is stressed... If you think longer term, the backdrop of the industry that we're in remains very attractive,” CEO Shane O'Kelly said.

Advance Auto Parts (AAP) sank around 25% on the New York Stock Exchange on Thursday to $42.40 per share, the worst close since January 20.

The company reported that its comparable store sales, which measure sales at locations open for more than a year, declined 0.5% year over year in the second quarter. Sales to professional automotive service providers increased, while revenue from do-it-yourself customers fell, O'Kelly noted in the AAP press release. He added that “tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter.”

Consolidated quarterly net sales were flat year over year at $2 billion. However, adjusted earnings per share rose 49% to $1.03. Refunds of tariffs contributed around $0.31 per share, the company said. Recall that the Trump administration rolled out sweeping tariffs in April 2025, only for the U.S. Supreme Court to rule in February that they were unlawful, while the Court of International Trade ordered them refunded, around $166 billion in total.

Despite the weak quarter, the management reaffirmed its full-year guidance. The company expects net sales of $8.49-8.58 billion and comparable store sales growth of 1-2%.

“The consumer is stressed, but think a little bit longer term, because I don't think we're going to be permanently in this state of affairs,” O'Kelly said during the earnings call with analysts, as reported by the Motley Fool. “If you think longer term, the backdrop of the industry that we're in remains very attractive.”

The management also raised its adjusted EPS guidance for the year to $2.60-3.30 from $2.40-3.10, citing the impact of tariff refunds.

AAP shares are up around 8% year to date, even after Thursday’s plunge.

Wall Street is broadly taking a wait-and-see approach: the stock has 24 “hold” ratings, three “sell” or “underweight” ratings, and two “buy” ratings, according to MarketWatch data. The average target price is $56.80 per share, implying 34% upside from the last close.

Walmart, the largest U.S. retailer, reported results alongside AAP. Its performance is regarded as a bellwether of consumer sentiment and spending. The company reported comparable sales growth of just 2.6% year over year, the slowest rate in more than six years, according to Bloomberg. The results sent its shares down 9% on Thursday.

Comparable sales at home improvement retailer Lowe’s increased 0.2% year over year, prompting the management to lower its full-year sales forecast to $92 billion from $92-94 billion. It no longer expects comparable sales growth, having previously guided for an increase of up to 2%.