11:05 AM EDT, 08/22/2024 (MT Newswires) -- Advance Auto Parts ( AAP ) reported a bigger-than-expected drop in fiscal second-quarter earnings and cut its full-year outlook while the auto part retailer announced the sale of its Worldpac wholesale business to Carlyle (CG) for $1.5 billion in cash.

Earnings per share fell to $0.75 from $1.32 year over year and missed the $0.91 average analyst estimate on Capital IQ for GAAP EPS. Shares of the retailer plunged 16% in Thursday trade.

Revenue slipped to $2.68 billion for the three months ended July 13 from $2.69 billion a year ago but topped the $2.67 billion market view. Comparable store sales edged up 0.4%, with the consensus calling for a 0.4% decline.

"Our team delivered positive comparable sales growth while navigating a challenging demand environment during the second quarter," Chief Executive Shane O'Kelly said in a statement.

Advance Auto Parts ( AAP ) lowered its fiscal 2024 revenue guidance to between $11.15 billion and $11.25 billion from its previous forecast of $11.3 billion to $11.4 billion. It now expects comparable sales to be down 1% to flat, compared with flat to up 1% previously. The company is projecting EPS between $2 and $2.50, down from a prior $3.75 to $4.25 range. The Capital IQ consensus is for revenue and GAAP EPS of $11.24 billion and $3.11, respectively.

The company's decision to sell its Worldpac automotive parts wholesale distribution business to investment firm Carlyle marks a "critical milestone" in Advance Auto Parts' ( AAP ) turnaround, according to O'Kelly. The sale strengthens the retailer's balance sheet and streamlines its focus, he said.

Worldpac generated roughly $2.1 billion in revenue and $100 million in earnings before interest, taxes, depreciation and amortization during the 12 months to the end of the second quarter, according to Advance Auto Parts ( AAP ). The company expects net proceeds of $1.2 billion after taxes and transaction fees.

Selling the business will enable Advance Auto Parts ( AAP ) to improve its sales trajectory and productivity and "deliver stronger returns for our shareholders," O'Kelly said. The transaction is expected to close before the end of the year.

"We are excited to partner with Worldpac, a great business operating in attractive markets," said Wes Bieligk, a partner, and Katherine Barasch, a senior member of Carlyle's global industrials investing team.

Price: 52.14, Change: -9.79, Percent Change: -15.80