Advance Auto Parts lifts free cash flow outlook to ~$150M

Full-year free cash flow guidance rises to approximately $150 million, while adjusted diluted EPS is projected at $2.75 to $3.10.

Available on EDGAR 11/05/2026 - 06:31 AM EST Accepted by SEC EDGAR 11/05/2026 - 06:31 AM EST Learn about SEC filing dates

Rhea-AI Filing Summary

Advance Auto Parts (AAP) reported third-quarter 2026 net sales of $2,012 million for the 12 weeks ended October 10, 2026, compared with $2,036 million for the 12 weeks ended October 4, 2025. Comparable store sales decreased 1.2%. GAAP operating income was $47 million versus $22 million, and net income was $15 million versus a $1 million loss. Diluted EPS was $0.25 versus a $0.02 loss; adjusted diluted EPS was $0.79 versus $0.92. Adjusted operating income margin was 4.5%, compared with 4.4%. The company said sales turned positive in the final four weeks.

Free cash flow for the 40 weeks ended October 10, 2026 was $109 million, compared with negative $277 million for the 40 weeks ended October 4, 2025. Advance raised full-year 2026 free cash flow guidance to approximately $150 million from approximately $100 million. Current guidance also includes adjusted diluted EPS of $2.75-$3.10 and net sales of approximately $8,500 million.

Advance declared a regular cash dividend of $0.25 per share, payable January 22, 2027, to common stockholders of record January 8, 2027.

3 points · 1 major

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0 major · 1 point

Hollow bars mark forward-looking points. How the balance works

Positive

• Major point. Forward-looking: it has not happened yet and may not happen.FY 2026 free cash flow guidance rose to approximately $150 million from approximately $100 million.
• Moderate pointOperating income was $47 million, compared with $22 million in Q3 2025.
• Moderate pointFree cash flow was $109 million for 40 weeks, versus negative $277 million.

Negative

• Moderate pointAdjusted diluted EPS was $0.79, compared with $0.92 in Q3 2025.

Filing Explained

Advance revised its fiscal 2026 outlook: comparable-store sales is now about 1% versus prior guidance of 1%-2%; adjusted operating margin is 4.0%-4.3% versus 3.8%-4.5%, and adjusted EPS is $2.75-$3.10 versus $2.60-$3.30.

8-K Event Classification

2 items: 2.02, 9.01

2 items

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, or exhibit attachments filed with this report.

Key Figures

Net sales: $2,012 million GAAP operating income: $47 million Diluted EPS: $0.25 per share +4 more

7 metrics

Net sales $2,012 million 12 weeks ended October 10, 2026; $2,036 million for the 12 weeks ended October 4, 2025

GAAP operating income $47 million 12 weeks ended October 10, 2026; $22 million for the year-earlier period

Diluted EPS $0.25 per share 12 weeks ended October 10, 2026; a loss of $0.02 per share for the year-earlier period

Adjusted diluted EPS $0.79 per share 12 weeks ended October 10, 2026; $0.92 per share for the year-earlier period

Free cash flow $109 million 40 weeks ended October 10, 2026; negative $277 million for the 40 weeks ended October 4, 2025

FY 2026 free cash flow guidance Approximately $150 million Raised from approximately $100 million

Regular cash dividend $0.25 per share Declared October 26, 2026; payable January 22, 2027 to holders of record January 8, 2027

Key Terms

Comparable store sales, Adjusted diluted EPS, Free cash flow, Adjusted EBITDAR, +1 more

5 terms

Comparable store sales financial

"Comparable store sales for the third quarter 2026 decreased 1.2%."

Comparable store sales measure the change in revenue generated by stores that have been open for a certain period, typically at least one year. It helps assess how well a business is growing by showing whether existing stores are attracting more customers and sales, rather than just counting new store openings. Investors use this figure to gauge the true health and performance of a company's core operations over time.

Adjusted diluted EPS financial

"Adjusted diluted EPS was $0.79 in the third quarter of 2026"

Adjusted diluted EPS is a company’s profit per share after adding back or removing one-time items (like restructuring costs or gains) and dividing by the number of shares including potential shares from options and convertible securities. Investors use it as a cleaner view of ongoing earnings—like looking at a car’s regular fuel efficiency rather than a trip boosted by downhill coasting—to judge underlying performance and compare companies without temporary distortions.

Free cash flow financial

"Free cash flow guidance raised to approx. $150 million"

Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.

Adjusted EBITDAR financial

"Adjusted Net Debt to Adjusted EBITDAR (Non-GAAP)"

Adjusted EBITDAR is a company’s reported profit measure that starts with operating earnings and then adds back interest, taxes, depreciation, amortization and rent, plus any one‑time items companies exclude. It aims to show how much cash a business generates from its core operations before the costs of financing, non‑cash accounting charges and property leases, like comparing two stores’ underlying sales by ignoring rent and loan payments. Investors use it to compare operating performance across firms and assess ability to cover fixed obligations, but companies may calculate it differently, so comparisons require caution.

Net leverage ratio financial

"ratio (“net leverage ratio”) is a key financial metric"

The net leverage ratio measures how much debt a company has compared to its available assets or earnings, after accounting for its cash and liquid assets. It helps investors understand how heavily a company relies on borrowed money to finance its operations and growth. A higher ratio indicates greater financial risk, while a lower ratio suggests a more cautious approach to borrowing.

Earnings Snapshot

Net sales: $2,012 million · Guidance included

Third quarter 2026

Net sales $2,012 million Compared with $2,036 million for the 12 weeks ended October 4, 2025

GAAP operating income $47 million Compared with $22 million for the year-earlier period

Net income $15 million Compared with a $1 million loss for the year-earlier period

Diluted EPS $0.25 per share Compared with a loss of $0.02 per share for the year-earlier period

Adjusted diluted EPS $0.79 per share Compared with $0.92 per share for the year-earlier period

Free cash flow $109 million For the 40 weeks ended October 10, 2026, compared with negative $277 million for the 40 weeks ended October 4, 2025

Guidance

FY 2026: net sales approximately $8,500 million; adjusted diluted EPS $2.75-$3.10; free cash flow approximately $150 million.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What were AAP's third-quarter 2026 sales and earnings?

Advance Auto Parts reported net sales of $2,012 million for the 12 weeks ended October 10, 2026. Net income was $15 million and diluted EPS was $0.25, compared with net sales of $2,036 million, a $1 million net loss and a $0.02 diluted loss per share in the year-earlier period.

What is AAP's updated FY 2026 free cash flow guidance?

Advance Auto Parts raised full-year 2026 free cash flow guidance to approximately $150 million from approximately $100 million. Current guidance also includes adjusted diluted EPS of $2.75-$3.10 and net sales of approximately $8,500 million.

When will AAP pay its declared $0.25 dividend?

Advance Auto Parts declared a regular cash dividend of $0.25 per share, payable January 22, 2027, to common stockholders of record January 8, 2027.

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false000115844900011584492026-11-052026-11-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 05, 2026

Advance Auto Parts, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware			001-16797	54-2049910
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
4200 Six Forks Road
Raleigh, North Carolina				27609
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (540) 362-4911

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		AAP		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02 Results of Operations and Financial Condition.

On November 5, 2026, Advance Auto Parts, Inc. (the "Company") issued a press release setting forth its financial results for its third quarter ended October 10, 2026. The press release is furnished as Exhibit 99.1 to this Report and is hereby incorporated by reference in this Item 2.02.

As provided in General Instruction B.2 of Form 8-K, the information and exhibit contained in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Exhibit Description
99.1	Press Release, dated November 5, 2026, issued by Advance Auto Parts, Inc.
101.1	Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL.
104.1	Cover Page Interactive Data File (embedded within the Inline XBRL document included in Exhibit 101.1)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ADVANCE AUTO PARTS, INC.
November 5, 2026		/s/ Ryan P. Grimsland
		Ryan P. Grimsland
		Executive Vice President, Chief Financial Officer

Exhibit 99.1

Advance Auto Parts Reports Third Quarter 2026 Results; Updates Full Year 2026 Guidance

l Comparable Sales Trends Improved Sequentially During Q3 2026; Turned Positive In the Final Four Weeks

l FY 2026 Free Cash Flow Guidance Raised To Approx. $150 Million; Over $400 Million Growth Year-over-Year

RALEIGH, N.C., November 5, 2026 — Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America, that serves both professional installer and do-it-yourself customers, announced its financial results for the third quarter ended October 10, 2026.

"Our comparable sales performance improved as the quarter progressed. Main Street Pro outperformed throughout the quarter while DIY trends improved compared to the softer trends experienced during the summer. I thank the team for their hard work and commitment to serving our customers," said Shane O'Kelly, president and chief executive officer. "Sales declined in the low-single-digit range during the first eight weeks before turning positive in the final four weeks, supported by improved transaction volumes. The Pro channel led performance in Q3, with low-single-digit sales growth including stronger Main Street Pro growth. The DIY channel declined in the low-single-digit range for the quarter, with trends recovering from negative mid-single-digit levels at the start of the quarter. Despite the volatile demand environment and industry cost pressures, we delivered an adjusted operating margin of 4.5% in Q3 and generated over $100 million of free cash flow year-to-date. We believe that our strategic initiatives are starting to gain traction and we remain focused on delivering sustainable, profitable growth over the long term."

Third Quarter 2026 Results (1)

Third quarter 2026 net sales totaled $2,012 million, compared with $2,036 million in the third quarter of the prior year. Comparable store sales for the third quarter 2026 decreased 1.2%.

The Company's third quarter 2026 gross profit was $897 million, or 44.6% of net sales compared with $881 million, or 43.3% in the third quarter of 2025. Adjusted gross profit was $899 million, or 44.7% of net sales in the third quarter of 2026 compared with $913 million, or 44.8% in the third quarter of 2025. The decrease in gross profit as a percentage of net sales compared to the third quarter of 2025 was primarily driven by changes in product and channel sales mix compared to last year and supply chain expense deleverage.

The Company's third quarter 2026 selling, general and administrative (SG&A) expenses were $850 million, or 42.2% of net sales compared with $859 million, or 42.2% of net sales in the third quarter of 2025. Adjusted SG&A expenses were $808 million, or 40.2% of net sales in the third quarter of 2026 compared with $823 million, or 40.4% of net sales in the third quarter of 2025. The decrease in SG&A as a percentage of net sales compared to the third quarter of 2025 was primarily driven by a reduction in expenses compared to last year, supported by disciplined expense management.

The Company's third quarter 2026 operating income was $47 million, or 2.3% of net sales, compared with $22 million, or 1.1% of net sales in the third quarter of 2025. Adjusted operating income was $91 million or 4.5% of net sales in the third quarter of 2026, compared with $90 million or 4.4% of net sales in the third quarter of 2025.

The Company's third quarter 2026 diluted earnings per share was $0.25, compared with loss of $0.02 in the third quarter of 2025. Adjusted diluted earnings per share was $0.79 in the third quarter of 2026, compared with $0.92 in the third quarter of 2025.

(1)The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Closed stores are not included in the comparable store sales calculation. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").

Capital Allocation

On October 26, 2026, the Company declared a regular cash dividend of $0.25 per share to be paid on January 22, 2027 to all common stockholders of record as of January 8, 2027.

Full Year 2026 Guidance(1)

The Company has revised its full year 2026 guidance to reflect year-to-date financial performance and updated operating assumptions for the fourth quarter of 2026.

		As of November 5, 2026				Prior Guidance
($ in millions, except per share data)		Low		High		Low		High
Net sales		Approx.$8,500				$8,485		$8,575
Comparable store sales (52 weeks)(2)		Approx. 1.00%				1.00%		2.00%
Adjusted operating income margin		4.00%		4.30%		3.80%		4.50%
Adjusted diluted EPS(3)		$2.75		$3.10		$2.60		$3.30
Capital expenditures		Approx. $300				Approx. $300
Free cash flow		Approx. $150				Approx. $100
Store growth
New store openings		30 - 35				30 - 35
Market hub openings		15 - 20				15 - 20

(1)Adjusted operating income margin, Adjusted diluted EPS and Free cash flow are Non-GAAP measures. For a better understanding of the Company's Non-GAAP adjustments, refer to the reconciliation of Non-GAAP financial measures in the accompanying financial tables. The Company is not able to provide a reconciliation of these forward-looking Non-GAAP measures presented herein because it is unable to predict with reasonable accuracy the value of certain adjustments and as a result, the comparable GAAP measures are unavailable without unreasonable efforts.

(2)Comparable store sales for fiscal 2026 is calculated based on an adjusted fiscal 2025 baseline to account for the 53rd week. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

(3)Includes pre-tax interest expense of approximately $210 million and pre-tax interest income of approximately $105 million.

Investor Conference Call

The Company will detail its results for the third quarter and full year 2026 via a webcast scheduled to begin at 8 a.m. Eastern Time on Thursday, November 5, 2026. The webcast will be accessible via the Investor Relations page of the Company's website (ir.AdvanceAutoParts.com).

To join by phone, please pre-register online for dial-in and passcode information. While registration is open through the live call, the Company suggests registering a minimum 10 minutes before the start of the call. A replay of the conference call will be available on the Company's Investor Relations website for one year.

About Advance Auto Parts

Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. As of October 10, 2026, Advance operated 4,325 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 787 independently owned Carquest branded stores across these locations in addition to various Caribbean islands. Additional information about Advance, including employment opportunities, customer services, and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com.

Investor Relations Contact:	Media Contact:
Lavesh Hemnani	Nicole Ducouer
E: invrelations@advance-auto.com	E: AAPcommunications@advance-auto.com

Forward-Looking Statements

Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast," “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, future business and financial performance, revenue, earnings, cash flow, liquidity, restructuring and asset optimization plans, financial objectives, debt capital structure, operational plans and objectives, capital expenditures, organizational changes, cost reductions, expectations for macroeconomic conditions, marketing strategies, inflation, impairments, consumer behavior and preferences, labor costs and availability, supply chain and merchandising strategies and effects, technology investments, effective tax rates, regulatory changes and impacts, anticipated impacts of tariffs and other trade barriers, tariff refunds, compliance with debt covenants, statements about the status of, and capacity and utilization under, the Company’s supply chain financing arrangements and statements about the Company’s future credit ratings and outlook as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, risks relating to incurrence of indebtedness and increased leverage, risks relating to the Company's credit ratings or perceived creditworthiness, the Company's ability to complete store openings, deterioration of general macroeconomic conditions, geopolitical factors, including tariffs, petroleum supply and prices, and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain, implementation and operation of information and technology systems and innovative technologies, and challenges with transforming and growing its business. Please refer to "Item 1A. Risk Factors" of the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as updated by the Company's subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions), (unaudited)(1)

Assets		October 10, 2026				January 3, 2026
Current assets:
Cash and cash equivalents		$	3,085			$	3,123
Receivables, net			404				380
Inventories, net			3,789				3,646
Other current assets			128				141
Total current assets			7,406				7,290
Property and equipment, net			1,285				1,269
Operating lease right-of-use assets			2,100				2,157
Goodwill			599				600
Other intangible assets, net			398				400
Other assets			133				110
Total assets		$	11,921			$	11,826
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable		$	3,065			$	2,977
Accrued expenses			714				756
Current portion of long-term debt			349				-
Other current liabilities			416				443
Total current liabilities			4,544				4,176
Long-term debt			3,039				3,412
Operating lease liabilities			1,795				1,812
Deferred income taxes			179				142
Other long-term liabilities			104				86
Total liabilities			9,661				9,628
Total stockholders' equity			2,260				2,198
Total liabilities and stockholders' equity		$	11,921			$	11,826

(1) This condensed consolidated balance sheet has been prepared on a basis consistent with the Company's previously prepared balance sheets filed with the Securities and Exchange Commission ("SEC"), but does not include the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”).

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in millions, except per share data), (unaudited)(1)

	Twelve Weeks Ended								Forty Weeks Ended
	October 10, 2026				October 4, 2025				October 10, 2026				October 4, 2025
Net sales	$	2,012			$	2,036			$	6,626			$	6,628
Cost of sales		1,115				1,155				3,625				3,764
Gross profit		897				881				3,001				2,864
Selling, general and administrative expenses, exclusive of restructuring expenses		808				826				2,699				2,771
Restructuring and related expenses		42				33				84				180
Selling, general and administrative expenses		850				859				2,783				2,951
Operating income (loss)		47				22				218				(87	)
Other, net:
Interest expense		(46	)			(40	)			(160	)			(86	)
Other income, net		23				16				76				61
Total other, net		(23	)			(24	)			(84	)			(25	)
Income (loss) before income tax expense		24				(2	)			134				(112	)
Income tax expense (benefit)		9				(1	)			40				(150	)
Net income (loss)	$	15			$	(1	)		$	94			$	38
Basic earnings (loss) per common share	$	0.25			$	(0.02	)		$	1.56			$	0.63
Basic weighted-average common shares outstanding		60.4				60.0				60.3				59.9
Diluted earnings (loss) per common share	$	0.25			$	(0.02	)		$	1.54			$	0.63
Diluted weighted-average common shares outstanding		60.9				60.0				60.9				60.5

(1) These condensed consolidated statements of operations have been prepared on a basis consistent with the Company's previously prepared statements of operations filed with the SEC, but does not include the footnotes required by GAAP.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions), (unaudited)(1)

		Forty Weeks Ended
		October 10, 2026				October 4, 2025
Cash flows from operating activities:
Net income		$	94			$	38
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization			188				214
Share-based compensation			29				29
Loss on sale and impairment of long-lived assets			41				23
Expected future credit losses, net			12				50
Provision for deferred income taxes			38				(27	)
Other, net			22				14
Net change in:
Receivables, net			(36	)			46
Inventories, net			(152	)			(75	)
Operating lease right-of-use assets			19				41
Other assets			(15	)			(57	)
Accounts payable			94				(270	)
Accrued expenses			14				(37	)
Operating lease liabilities			(56	)			(108	)
Other liabilities			19				1
Net cash provided by (used in) operating activities			311				(118	)
Cash flows from investing activities:
Purchases of property and equipment			(202	)			(159	)
Proceeds from sales of property and equipment			2				22
Other, net			(9	)			—
Net cash used in investing activities of continuing operations			(209	)			(137	)
Net cash used in investing activities of discontinued operations			(55	)			—
Net cash used in investing activities			(264	)			(137	)
Cash flows from financing activities:
Dividends paid			(45	)			(45	)
Repayment of long-term debt			(29	)			(300	)
Proceeds from issuance of long-term debt			—				1,950
Debt issuance costs			—				(42	)
Other, net			(8	)			(4	)
Net cash (used in) provided by financing activities			(82	)			1,559
Effect of exchange rate changes on cash			(3	)			1
Net (decrease) increase in cash and cash equivalents			(38	)			1,305
Cash and cash equivalents, beginning of period			3,123				1,869
Cash and cash equivalents, end of period		$	3,085			$	3,174

(1) This condensed consolidated statement of cash flows has been prepared on a basis consistent with the Company's previously prepared statements of cash flows filed with the SEC, but does not include the footnotes required by GAAP.

Reconciliation of Non-GAAP Financial Measures

The Company uses certain Non-GAAP financial measures described below to supplement the Company's unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company's core operating performance. These Non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such Non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. The Company is presenting these Non-GAAP metrics to provide investors insight to the information used by our management to evaluate our business and financial performance. The Company believes that these measures provide investors increased comparability of our core financial performance over multiple periods with other companies in our industry. The Company's Non-GAAP financial measures include Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Selling, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating Income (loss), Adjusted Operating Income (loss) Margin, Adjusted Net Income (loss), Adjusted Diluted Earnings (loss) Per Share (“Adjusted Diluted EPS”), Free Cash Flow and Adjusted Net Debt to Adjusted EBITDAR ("Net Leverage Ratio"), and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows.

The Company has presented these Non-GAAP financial measures as the Company believes that the presentation of the financial results that exclude the categories of expenses and income listed below provide useful and indicative information about the performance of the Company's base operations because the expenses and income vary from period to period in terms of size, nature and significance. The Company also adjusts for the income tax impact of these Non-GAAP adjustments using the estimated tax rate in effect for the respective Non-GAAP adjustments. Included below is a description of the categories of expenses and income that the Company has determined are not normal, recurring cash operating expenses necessary to operate the Company’s business.

•Restructuring and other related expenses: Expenses directly incurred relating to announced restructuring initiatives. These expenses include severance expense, retention bonuses, incremental reserves related to the collectibility of receivables (inclusive of notes receivable) and third-party professional services expenses incurred for services provided in assisting in the development and execution of the plan(s). These expenses also include certain costs related to the distribution network optimization plan for the conversion of the stores and distribution centers to market hubs, including realized losses on liquidated inventory, temporary labor, nonrecurring professional service fees and team member severance.

•Impairments and write-down of assets: Expenses relating to the impairment of certain assets, including operating lease right-of-use ("ROU") assets, property and equipment, goodwill and intangible assets. These expenses also include incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, ROU asset amortization after store closure, and incremental lease abandonment expenses as a result of accelerating ROU asset amortization for leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations.

•Other items: Expenses primarily relating to nonrecurring services rendered by third-party vendors engaged to perform strategic business review and transformational activities, expense incurred related to acquisitions and divestitures including third-party transaction related expenses, transition services agreement expenses and income, and certain other expenses not viewed as normal cash operating expenses. In fiscal 2025, these expenses also included a non-cash charge related to expected future credit losses on vendor receivables due from a vendor that filed voluntary petitions for Chapter 11 bankruptcy protection. Other items also include certain tax items, both expenses and benefits, that are unrelated to the fiscal year in which they are recorded and are excluded in order to provide a clearer understanding of the Company’s ongoing Non-GAAP tax rate and after-tax earnings.

Reconciliation of GAAP Results to Non-GAAP Results:

	Twelve Weeks Ended October 10, 2026
	GAAP Results			GAAP Margin(1)			Restructuring and Other Related Expenses(2)			Impairments and Write-downs of assets(3)			Other Items			Non-GAAP Adjusted Results			Non-GAAP Adjusted Margin(1)
Net sales	$	2,012					$	-		$	-		$	-		$	2,012
Cost of sales		1,115						2			-			-			1,113
Gross Profit		897			44.6	%		2			-			-			899			44.7	%
Selling, general and administrative		850			42.2	%		4			38			-			808			40.2	%
Operating income		47			2.3	%		6			38			-			91			4.5	%
Other, net		(23	)					-			-			-			(23	)
Income tax expense (benefit)(4)		9						(2	)		(9	)		-			20
Net Income	$	15					$	4		$	29		$	-		$	48
Diluted earnings per share	$	0.25														$	0.79
Diluted weighted-average common shares outstanding		60.9															60.9

(1) These GAAP and Non-GAAP measures are calculated as a percentage of net sales.

(2) Restructuring and other related expenses includes expenses associated with location closures.

(3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $2 million and impairment charges for property and equipment and ROU assets of $36 million, net of gains on sale.

(4) The income tax impact of Non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective Non-GAAP adjustments.

	Twelve Weeks Ended October 4, 2025
	GAAP Results			GAAP Margin(1)			Restructuring and Other Related Expenses			Impairments and Write-downs of assets			Other Items			Non-GAAP Adjusted Results			Non-GAAP Adjusted Margin(1)
Net sales	$	2,036					$	-		$	-		$	-		$	2,036
Cost of sales		1,155						4			-			28			1,123
Gross Profit		881			43.3	%		4			-			28			913			44.8	%
Selling, general and administrative		859			42.2	%		13			18			5			823			40.4	%
Operating income		22			1.1	%		17			18			33			90			4.4	%
Other, net		(24	)					-			-			8			(16	)
Income tax expense (benefit)		(1	)					(4	)		(5	)		(10	)		18
Net Income	$	(1	)				$	13		$	13		$	31		$	56
Diluted earnings per share	$	(0.02	)													$	0.92
Diluted weighted-average common shares outstanding		60.0															60.9

(1) These GAAP and Non-GAAP measures are calculated as a percentage of net sales.

Details of Non-GAAP adjustment amounts included in the Non-GAAP reconciliation for the prior period are included in the press release for that period.

	Forty Weeks Ended October 10, 2026
	GAAP Results			GAAP Margin(1)			Restructuring and Other Related Expenses(2)			Impairments and Write-downs of assets(3)			Other Items(4)			Non-GAAP Adjusted Results			Non-GAAP Adjusted Margin(1)
Net sales	$	6,626					$	-		$	-		$	-		$	6,626
Cost of sales		3,625						-			-			-			3,625
Gross Profit		3,001			45.3	%		-			-			-			3,001			45.3	%
Selling, general and administrative		2,783			42.0	%		24			53			7			2,699			40.7	%
Operating income		218			3.3	%		24			53			7			302			4.6	%
Other, net		(84	)					-			-			1			(83	)
Income tax expense (benefit)(5)		40						(6	)		(13	)		(2	)		61
Net Income	$	94					$	18		$	40		$	6		$	158
Diluted earnings per share	$	1.54														$	2.59
Diluted weighted-average common shares outstanding		60.9															60.9

(1) These GAAP and Non-GAAP measures are calculated as a percentage of net sales.

(2) Restructuring and other related expenses includes $13 million for reserves on independent loans and $11 million, net, of other related expenses associated with location closures.

(3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $12 million and impairment charges for property and equipment and ROU assets of $41 million, net of gains on sale.

(4) Other items include $6 million of nonrecurring services rendered by third-party vendors and $2 million of other items.

(5) The income tax impact of Non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective Non-GAAP adjustments.

	Forty Weeks Ended October 4, 2025
	GAAP Results			GAAP Margin(1)			Restructuring and Other Related Expenses			Impairments and Write-downs of assets			Other Items			Non-GAAP Adjusted Results			Non-GAAP Adjusted Margin(1)
Net sales	$	6,628					$	-		$	-		$	-		$	6,628
Cost of sales		3,764						9			-			28			3,727
Gross Profit		2,864			43.2	%		9			-			28			2,901			43.8	%
Selling, general and administrative		2,951			44.5	%		93			76			24			2,758			41.6	%
Operating income (loss)		(87	)		(1.3	)%		102			76			52			143			2.2	%
Other, net		(25	)					-			-			1			(24	)
Income tax expense (benefit)		(150	)					(26	)		(19	)		(139	)		34
Net Income	$	38					$	76		$	57		$	(86	)	$	85
Diluted earnings per share	$	0.63														$	1.40
Diluted weighted-average common shares outstanding		60.5															60.5

(1) These GAAP and Non-GAAP measures are calculated as a percentage of net sales.

Details of Non-GAAP adjustment amounts included in the Non-GAAP reconciliation for the prior period are included in the press release for that period.

Reconciliation of Free Cash Flow:

		Forty Weeks Ended
(in millions)		October 10, 2026				October 4, 2025
Cash flows from continuing operations(1)		$	311			$	(118	)
Purchases of property and equipment			(202	)			(159	)
Free cash flow		$	109			$	(277	)

(1) The forty weeks ended October 10, 2026 and October 4, 2025, included approximately $19 million and $130 million, respectively, of cash charges related to restructuring and other related expenses under our 2024 Restructuring Plan.

Reconciliation of Adjusted Net Debt to Adjusted EBITDAR(1)

	Four Quarters Ended
(in millions, except debt to net income and adjusted net debt to adjusted EBITDAR ratios)	October 10, 2026
Total Debt (GAAP)	$	3,388
Add: Operating lease liabilities		2,189
Less: Cash & cash equivalents		(3,085	)
Adjusted Net Debt (Non-GAAP)	$	2,492
Net income (GAAP)(2)	$	124
Depreciation and amortization		246
Interest expense		212
Other income, net		(106	)
Income tax expense		31
Rent expense		524
Share-based compensation		37
Transformation and other charges(3)		89
Adjusted EBITDAR (Non-GAAP)	$	1,157
Debt to Net income (GAAP)		27.3
Adjusted Net Debt to Adjusted EBITDAR (Non-GAAP)		2.2

(1) Management believes its Adjusted Net Debt to Adjusted EBITDAR ratio (“net leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The Company’s goal is to re-establish an investment grade rating. The Company's credit rating could impact the Company's ability to obtain additional funding. A negative change in the Company's investment rating, could negatively impact future performance and limit growth opportunities. The net leverage ratio calculated by the Company is a Non-GAAP measure and should not be considered a substitute for debt to net income, as determined in accordance with GAAP. The Company adjusts the calculation to deduct available cash & cash equivalents and to add back the Company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the Company’s peers and to account for differences in debt structures and leasing arrangements. The Company also adjusts the calculation to remove rent expense and transformational and other non-cash charges. The Company’s calculation of its net leverage ratio may not be calculated in the same manner as other companies, and thus may not be comparable to similarly titled measures used by other companies.

(2) Excludes Net loss from discontinued operations recorded in the fourth quarter of fiscal 2025.

(3) The adjustments to the four quarters ended October 10, 2026 primarily include expenses associated with restructuring and related activities, including non-cash impairments, in addition to other items, the Company's material weakness remediation efforts, professional fees and executive turnover.

Store Information:

The below table summarizes the changes in the number of company-operated stores during the twelve and forty weeks ended October 10, 2026:

	Twelve Weeks Ended
	AAP		CARQUEST		Total
July 18, 2026	4,072		239		4,311
New	16		1		17
Closed	(1)		(2)		(3)
October 10, 2026	4,087		238		4,325

	Forty Weeks Ended
	AAP		CARQUEST		Total
January 3, 2026	4,066		239		4,305
New	24		2		26
Closed	(3)		(3)		(6)
October 10, 2026	4,087		238		4,325

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