Advance Auto Parts (AAP) shares fell 16% to $46.92 in premarket trading on Thursday after the company reported mixed second-quarter results, with earnings beating expectations but sales and same-store revenue falling short.

The stock had risen 43% year to date heading into the session, but that gain was quickly reversed after the report. The run-up had been part of a recovery under a multiyear turnaround led by CEO Shane O’Kelly, who took the top job in 2022 and has since sold the company’s Worldpac wholesale distribution business for about $1.5 billion and closed hundreds of underperforming stores to cut costs.

Adjusted earnings for the quarter came in at $1.03 per share, up from $0.69 a year earlier and above the Wall Street estimate of $0.81. Net sales totaled $2 billion, slightly below the analyst forecast of $2.04 billion and roughly flat with $2.01 billion in the same period last year.

Tariff refunds contributed about $0.31 per share to the adjusted earnings result, a detail that helped explain the size of the earnings beat.

Same-store sales fell 0.5% during the quarter, missing Wall Street’s expectation for 1.4% growth. Investors reacted most sharply to that performance gap.

DIY Demand Under Pressure

CEO Shane O’Kelly said the weakness was concentrated in the DIY channel.

“Total enterprise sales performance was impacted by the DIY channel as tighter household budgets constrained spending more than we anticipated, especially during the last four weeks of the quarter,” he said.

O’Kelly also described the broader demand environment as “volatile.”

The professional segment posted low-single-digit growth, but that was not enough to offset the weakness in DIY and lift overall same-store sales.

The divide points to a structural feature of the auto-parts business: chains sell through two channels — DIY retail customers and professional installers — and DIY spending is the more exposed to household budgets, because routine maintenance purchases can be postponed, while professional sales track repair-shop volumes. That split is one reason larger rivals such as AutoZone and O’Reilly have invested heavily in commercial programs, which have grown faster than DIY in recent years.

The decline in Advance Auto Parts also weighed on peers. AutoZone (AZO) fell 2.2%, while O’Reilly Automotive (ORLY) dropped 2% in sympathy.

Guidance Raised for Full-Year EPS

Advance Auto Parts kept its full-year net sales outlook unchanged at $8.485 billion to $8.575 billion. The company also maintained its same-store sales guidance for growth of 1% to 2%.

At the same time, management raised its full-year adjusted earnings outlook to $2.60 to $3.30 per share from a prior range of $2.40 to $3.10. The company said the increase reflected higher pretax interest income. With the sales and same-store outlooks left unchanged, the earnings upgrade came from outside the core retail operation rather than from stronger expected store-level demand.

The company’s market capitalization is approximately $3.43 billion, and its average daily trading volume is about 1.87 million shares.

AAP carries heavy debt and negative free cash flow, which limits room for error if sales continue to fall short of expectations. For the second half of the fiscal year, the questions investors will be watching are whether DIY demand stabilizes and whether comparable sales can climb back toward the full-year target while management executes the turnaround in a demand environment it has itself described as volatile.