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AAP.US
id: 845

Advanced Auto Parts (AAP) Pricing Strategy Failure Case

E.D. North Carolina
Court
5:23-cv-00563
Case number
16 Nov 2022
Class period Start
30 May 2023
Class period End
  • In May 2023, Advanced Auto Parts reported disappointing financial results and revised downward its 2023 guidance.
  • $AAP fell 35% and lost $2.3B of market cap, injuring shareholders.
  • Investor suspect AAP and its Executives of misguiding investors about the failure of a new pricing strategy.
On May 31, 2023, Advanced Auto Parts (AAP) held its quarterly earnings call for their Q1 2023 financial results. During that call, its CEO, Thomas R. 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."
  • Advance Auto Parts' CFO Jeffrey W. 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% margin.
On this news, $AAP fell 35% and lost over $2.3 billion of its market capitalization, thereby injuring investors.

Taking all representations into account, Investors have reasons to suspect AAP and its Executives of misguiding investors about the failure of a new pricing strategy and purposefully inflating the impact of price reductions, leading to a steep, one-day stock drop after the truth was revealed.
Alleged Offence
Misleading Statements
Financial Misrepresentation
Failure to Disclose
Omissions
Suspected Party
Directors
Management
Security Type
Stocks
Trade Direction
Long
Shock Event Date
31 May 2023
Filing date
09 October 2023
Judge
Hon. James C. Dever, III
Collecting participants…

Advance Auto Parts Inc

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty ...

    Ticker
    AAP.US
    ISIN
    US00751Y1064
    CIK
    1158449
    Sector
    Consumer Cyclical
    Industry
    Specialty Retail
    Country
    USA
    Address
    4200 Six Forks Road, Raleigh, NC, United States, 27609