Shares of car parts retail chain Advance Auto Parts (AAP -16.70%) got creamed on Wednesday after the company reported financial results for the fourth quarter of 2024 and issued guidance for 2025. Needless to say, it's not what investors were hoping for. And it's why Advance stock is down a crushing 16% as of 2 p.m. ET.

2024 was tough, and 2025 will have headwinds as well

Advance is in the early stages of a multiyear business turnaround. It's selling noncore assets, closing underperforming stores, and reconfiguring its entire supply chain. The numbers are consequently complicated to wade through. But the company had full-year net sales of $9.1 billion, just a hair over management's guidance, which was obviously good.

However, the problem is with Advance's guidance. The company only expects net sales of $8.4 billion to $8.6 billion in 2025 as it continues to close stores. And with a forecast of $300 million in capital expenditures in 2025, management expects negative full-year free cash flow of $25 million to $85 million.

It seems that investors had hoped that Advance would be further along in its turnaround by now, and that's why the stock dropped to within spitting distance of a 15-year low today.

Are better days ahead?

Advance's profit margins have trailed major competitors for years, and new management was brought in to fix things. The culprit was found to be an inefficient supply chain, which is being worked on now. The process is expensive, but the sale of its Worldpac business bolstered its balance sheet.

The good news is that Advance still has positive operating cash flow. And for 2027, it's targeting net sales of $9 billion and an adjusted operating margin of 7%. That would yield adjusted operating income of over $600 million and might finally attract some attention, considering its current market value is below $2.3 billion.

That said, Advance has work to do, and it might not reach the prize. This is why many investors continue to favor its better-run competitors today.