NEW YORK, Nov. 05, 2023 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Advance Auto Parts, Inc. (“AAP” or the “Company”) (NYSE: AAP) and certain officers. The class action, filed in the United States District Court for the Eastern District of North Carolina, Western Division, and docketed under 23-cv-611, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired AAP securities between November 16, 2022 and May 30, 2023, inclusive (the “Class Period”), against AAP and certain of its officers and/or directors for violations of the Securities Exchange Act of 1934 (the “1934 Act” or the “Exchange Act”)). As set forth in detail below, Defendants violated Section 10(b) of the 1934 Act by failing to disclose pertinent information relevant to the Company, or, alternatively providing information about the Company which was materially misleading or deceptive.
If you are a shareholder who purchased or otherwise acquired AAP securities during the Class Period, you have until December 8, 2023 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
AAP is a retailer specializing in automobile parts and accessories, serving both automobile professionals and non-professional consumers. The Company operates stores called “Advanced Auto Parts,” “Autopart International,” “Carquest,” and “Worldpac.” AAP operates over 4,700 stores (across all four brands) in the U.S. and Canada.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: 1) defendants misrepresented the efficacy of AAP’s strategic pricing initiative and the impact of the price reductions; 2) omitted and/or concealed the negative impacts of the pricing initiative; 3) provided investors with an overly optimistic perception of AAP’s operations; and 4) created the false impression that inflation and macroeconomic factors had an insubstantial impact on the Company’s margins.
At the beginning of the Class Period, on November 16, 2022, the Company held its quarterly earnings call for investors. During the earnings call, President and Chief Executive Officer Thomas R. Greco (“Greco”) announced “strategic pricing initiatives” aimed to help propel margins growth into 2023. Specifically, Greco stated “we’ve tested and will make surgical pricing actions in certain categories to enable us to better address changes in competitive pricing dynamics.”
The Company initiated these “strategic pricing initiatives” despite Greco’s recognition that “our research has consistently indicated that price is not the most important driver for choice for professional customers.” He later stated, “availability is the #1 driver of choice for the professional installers, and as we said many times, price is much lower down the list.”
On February 28, 2023, the Company held its quarterly earnings call for the 2022 fourth quarter. During that call, Greco stated, “[w]e continue to execute the disciplined inventory and pricing actions we discussed this quarter. These actions contributed to stronger results, and we expect to improve parts availability throughout 2023, which we believe is the single most important driver to accelerate line growth.” Greco also dismissed the impact of the U.S. economy and other macroeconomic factors on sales and margins. He stated, “we remain cautious surrounding the macroeconomic backdrop, including the potential for ongoing pressure on low-to-middle income consumers. However, our 2023 guidance is underpinned by continued industry strength with the drivers of demand remaining positive.” The Company then issued its 2023 guidance, projecting net sales of $11.4 billion to $11.6 billion and an operating income margin of 7.8% to 8.2%. The Company also remained “committed to paying quarterly cash dividends,” according to Executive Vice President and Chief Financial Officer Jeffrey W. Shepherd (“Shepherd”).
On May 31, 2023, AAP held its quarterly earnings call for 2023 first quarter. During that call, Greco conceded, “our financial results in the first quarter were well below expectations.” Because the Company slashed prices on products, Greco stated “we had less price realization than plans, which put substantially higher pressure on our product margin price.” Shepherd revealed during the May call that the Company’s strategic pricing program resulted in the Company being “unable to price to cover product costs in the quarter.” The Company consequently revised downward its 2023 guidance to an operating margin of 5% to 5.3% from the previously announced 7.8% to 9.2% margins.
Investors reacted negatively to these revelations and the reduced 2023 guidance. On May 30, 2023, AAP shares closed at $112.20. The following day, on May 31, 2023, AAP shares closed at $72.89 on unusually high volume. This $39.31 difference reflects a 35% one-day drop.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
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