Auto part prices are rising faster than expected and inflation will heat up into year-end, according to the chief financial officer of Advance Auto Parts, one of the country’s biggest aftermarket parts providers.
Supply-chain disruptions caused by the COVID-19 pandemic, a labor shortage, wage inflation and higher raw materials costs contributed to inflation already exceeding the company’s expectations, and there is no end in sight.
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"There is more inflation coming," said Advance Auto Parts CFO Jeffrey Shepherd on the company’s second-quarter earnings call on Tuesday.
The Raleigh, North Carolina-based company sees parts inflation for the rest of this year in the 2% to 4% range, up from its previous outlook of 1% to 2%.
Advance Auto Parts isn’t alone in warning about higher prices later this year.
CarParts.com CEO Lev Peker earlier this month told FOX Business that higher costs for products, shipping containers and labor would drive auto part prices up another 5% this year. He said they had already seen an across-the-board increase of 5% to 7%.
The auto parts industry has typically been able to raise prices on customers due to the infrequency of purchases, and has "been able to deal with unplanned inflation very successfully over many years," said Advance Auto Parts CEO Thomas Greco.
Advance Auto Parts on Monday evening reported diluted earnings of $2.74 per share, unchanged from a year ago, as higher costs weighed on profits and sales rose 5.9% year over year to $2.6 billion.
The company raised its full-year sales guidance to a range between $10.6 billion and $10.8 billion, up from its prior outlook of $10.4 billion to $10.6 billion. Comparable-store sales are forecast to grow by 6% to 8%, higher than the previous guidance of 4% to 6% growth.
Advance Auto Part shares were up 32% this year through Monday compared with the S&P 500’s 19% gain.