Dec. 24, 2025 — Advance Auto Parts, Inc. (NYSE: AAP) is back in focus heading into the holiday period after a volatile December for auto-parts retailers. Shares traded around $40–$41 on Dec. 24, bouncing from recent weakness as investors weigh the company’s turnaround execution, sector-wide pricing concerns, and a string of Wall Street notes.
Even after today’s rebound, AAP is still moving inside a wide 52-week range of roughly $28.89 to $70.00, a reminder that the market remains deeply split on whether Advance Auto Parts is in a durable recovery—or just enjoying temporary relief rallies. [1]
AAP stock today: where the price sits and why it’s been jumpy
As of Dec. 24, AAP was trading modestly higher on the session (after a sharp down day on Dec. 23), with intraday swings that reflect how headline-driven the stock has become. [2]
One useful way to frame the recent turbulence: a Trefis breakdown of the stock’s late-2025 slide points to multiple compression (investors paying less per dollar of sales) as a major driver of the drawdown into late December. [3]
That context matters because it tells you what the market is really arguing about: not whether AAP sells auto parts (it does), but whether the turnaround can produce credible, repeatable margins and cash flow.
The biggest December headlines around Advance Auto Parts
1) Leadership change in supply chain, effective Dec. 22
The most concrete company-specific news this month: Advance Auto Parts announced it appointed Ronald Gilbert as Senior Vice President of Supply Chain, effective Dec. 22, 2025, reporting directly to CEO Shane O’Kelly. [4]
In the same release, the company underscored the operational scope of the turnaround: it said it is on track to operate 16 distribution centers (DCs) in the U.S. by the end of 2025, down from 38 DCs in 2023, and it reiterated a target of 60 market hubs by mid-2027. [5]
Why investors care: for an auto parts retailer, “supply chain” isn’t a back-office function—it’s the business. Fill rates, speed, and inventory availability directly determine whether professional installers (“Pro”) and DIY customers keep coming back.
2) Sector downgrade worries: pricing pressure narrative returns
On the macro/sector side, Wolfe Research downgraded the auto parts retail sector (Market Outperform → Market Weight) citing concern that price decreases could be looming—an issue that can quickly pressure same-store sales and gross margin across the group. [6]
AAP shares also saw pressure around this theme earlier in December, with commentary tying stock weakness to the sector call and softer pricing expectations. [7]
3) Dividend remains in place: $0.25 declared, payable Jan. 23, 2026
Advance Auto Parts declared a regular quarterly cash dividend of $0.25 per share, payable Jan. 23, 2026, to shareholders of record as of Jan. 9, 2026. [8]
The dividend is not the core bull case—turnaround economics are—but it does signal that the board has, so far, chosen continuity rather than a defensive reset.
The most important “forecast” is management’s: updated FY2025 guidance
Advance Auto Parts’ latest formal outlook came with its Q3 FY2025 results (released Oct. 30, 2025), which is still the key reference point for investors as of Dec. 24.
Q3 FY2025 snapshot: profitability improving, but sales still pressured
For the third quarter of 2025, the company reported:
- Net sales: about $2.0 billion (down from ~$2.1 billion a year earlier)
- Comparable store sales:+3.0%
- Adjusted operating income:$90 million (about 4.4% of net sales)
- Adjusted diluted EPS:$0.92 (vs. negative in the prior-year quarter) [9]
Management attributed margin expansion in part to savings from footprint optimization completed in March and lower product costs tied to strategic sourcing. [10]
Updated full-year FY2025 guidance (as of Oct. 30, 2025)
Advance Auto Parts tightened and raised key parts of its FY2025 guidance to:
- Net sales (continuing ops):$8.55B–$8.60B
- Comparable store sales:+0.7% to +1.3%
- Adjusted operating income margin:2.4%–2.6%
- Adjusted diluted EPS:$1.75–$1.85
- Free cash flow:($90M) to ($80M) (still negative)
- Capital expenditures: about $250M–$300M
- Store openings:30 new stores
- Market hub openings:14 new market hubs [11]
A subtle but crucial line in that guidance: the company said assumptions include that current tariffs remain in place for the remainder of 2025. [12]
Cash flow is still the hard part
Through the third quarter of 2025, Advance reported free cash flow outflow of $277 million, including roughly $130 million of cash charges tied to restructuring and related expenses. [13]
That’s why the debate around AAP often comes back to a simple question: can margin gains and operating improvements turn into cash after the restructuring phase ends?
The turnaround blueprint: fewer stores, fewer DCs, more “market hubs”
The company’s restructuring/strategy framework—laid out during its 2024 operational review—still shapes investor expectations today.
Advance’s stated plan included reducing its U.S. footprint by closing 523 corporate stores, exiting 204 independent locations, and closing four distribution centers, alongside a broader set of initiatives spanning store operations, merchandising, and supply chain. [14]
Reuters also reported on the closure plan and job cuts tied to weaker demand dynamics at the time the program was announced. [15]
“Market hubs” are the growth wedge
In March 2025, Advance said it completed the store closure phase and expected to open 30 new locations in 2025 and at least 100 additional locations through 2027, including larger market hubs. [16]
The company described market hubs as materially larger assortment points—around 75,000–85,000 SKUs—versus 20,000–25,000 SKUs in typical stores, designed to improve same-day delivery and parts availability. [17]
Debt and interest costs: part of the 2025 story investors still track
Advance’s 2025 restructuring has not been costless. In its Q2 FY2025 release, the company highlighted that it:
- completed an offering of $1.95 billion of senior notes, and
- entered a new $1.0 billion asset-backed revolving credit facility to replace its prior facility. [18]
It also revised adjusted EPS guidance at that time to reflect higher net interest expense related to the notes offering. [19]
Media coverage earlier in the year similarly emphasized that outlook changes and new financing arrangements were key investor concerns—even when quarterly results came in better than expected. [20]
Analyst view: cautious optimism, but price targets signal uncertainty
Ratings and price targets have been mixed
In recent analyst commentary:
- BofA Securities reiterated an Underperform rating with a $40 price target, pointing to weaker sales tracking and caution around the near-term setup. [21]
- Evercore ISI maintained an “In-Line” stance while lowering its price target (reported at $56). [22]
That spread—$40 on the cautious end, mid-$50s on a more neutral stance—captures the market’s core disagreement: whether operational progress (better comps and margins) can persist long enough to justify a rerating.
What consensus models are implying
Aggregator snapshots (which can differ by source and update timing) generally suggest the Street expects improvement in earnings power over the next year as restructuring costs fade. For example, MarketBeat’s summary indicates expectations for earnings to improve next year versus recent trailing results. [23]
Separately, widely followed market data dashboards show AAP trading at a relatively low price-to-sales multiple and a mid-teens forward P/E based on forward estimates—numbers that can look “cheap,” but only if margins and cash flow stabilize. [24]
Short interest: fuel for sharp moves in either direction
AAP also has meaningful short positioning. As of Nov. 28, 2025, MarketBeat reported:
- Short interest:~10.34 million shares
- Short interest as % of float:~17.34%
- Days to cover: about 8.0 [25]
That doesn’t guarantee a “short squeeze,” but it does help explain why AAP can gap hard on earnings, guidance changes, or even sector notes. When positioning is crowded, small surprises get amplified.
What to watch next after Dec. 24, 2025
1) Next earnings date: not yet announced by the company (calendars vary)
As of today, Advance Auto Parts has not published a press release announcing the Q4/FY2025 earnings date on its investor relations “press releases” feed (the most recent earnings-date release there is for prior periods). [26]
Market calendars currently estimate late February timing (for example, Feb. 25, 2026 appears as an estimate on some listings), but investors should treat those as provisional until Advance formally confirms. [27]
2) Evidence that supply chain changes are sticking
With a new supply chain SVP stepping in, investors will be watching whether execution stays on track—especially the DC footprint reduction and market hub rollout that management has highlighted as central to service levels and cost structure. [28]
3) Pricing environment for the whole category
If Wolfe’s pricing-pressure thesis proves right, the entire auto-parts retail group could see margin headwinds—particularly if competitors choose to protect traffic with price investment. [29]
4) Free cash flow: the “prove it” metric
AAP’s updated FY2025 guidance still calls for negative free cash flow, and year-to-date outflows have been significant due in part to restructuring cash costs. The market will want to see a path from “restructuring progress” to “cash generation.” [30]
Bottom line for Advance Auto Parts stock on Dec. 24, 2025
Advance Auto Parts enters the end of 2025 as a classic turnaround stock: real operational improvement (margins, comps, and guidance tightening), paired with real structural challenges (cash flow, pricing pressure risk, and execution complexity). [31]
For investors, the practical setup is straightforward:
- Bulls are betting the supply chain and store footprint reset creates a better, leaner Advance that can push toward its longer-term margin ambitions. [32]
- Bears are betting that competition and pricing will cap margins, while cash flow and leverage constraints limit how quickly confidence can return. [33]
Either way, the next confirmed company update—especially around FY2026 expectations and the cash flow trajectory—remains the catalyst most likely to determine whether AAP’s late-December bounce becomes something sturdier.
References
1. www.marketwatch.com, 2. www.investing.com, 3. www.trefis.com, 4. ir.advanceautoparts.com, 5. ir.advanceautoparts.com, 6. www.investing.com, 7. finance.yahoo.com, 8. ir.advanceautoparts.com, 9. ir.advanceautoparts.com, 10. ir.advanceautoparts.com, 11. ir.advanceautoparts.com, 12. ir.advanceautoparts.com, 13. ir.advanceautoparts.com, 14. ir.advanceautoparts.com, 15. www.reuters.com, 16. ir.advanceautoparts.com, 17. ir.advanceautoparts.com, 18. ir.advanceautoparts.com, 19. ir.advanceautoparts.com, 20. www.investopedia.com, 21. finance.yahoo.com, 22. public.com, 23. www.marketbeat.com, 24. finance.yahoo.com, 25. www.marketbeat.com, 26. ir.advanceautoparts.com, 27. www.marketbeat.com, 28. ir.advanceautoparts.com, 29. www.investing.com, 30. ir.advanceautoparts.com, 31. ir.advanceautoparts.com, 32. ir.advanceautoparts.com, 33. www.marketbeat.com
