Advance Auto Parts to close 523 corporate stores, exit 200 independent locations
Advance Auto Parts reported another quarter of declining sales and said it planned to close 700-plus stores as part of a “strategic plan to improve business performance with a focus on core retail improvements."
The automotive parts retailer said the targeted closures are part of an asset optimization program that came it completed an operational productivity review of the business. The company is closing 523 Advance corporate stores and exiting 204 independent locations. It also is shuttering four distribution centers. (As of Aug. 4, Advance had a total of 4,492 corporate stores.)
The company estimates total costs of $350 million to $750 million from the closures, which are expected to be completed by mid-2025.
Advance Auto Parts has been working to turnaround its business to return to profitability and reverse falling sales. Earlier this month, it completed the sale of automotive parts wholesaler Worldpac to global investment firm Carlyle for $1.5 billion as part of a “simplification” of its business model.
"We are pleased to have made progress on our strategic actions, including the completion of the sale of Worldpac and a comprehensive operational productivity review of our business,” said Shane O’Kelly, president and CEO. “We are charting a clear path forward and introducing a new three-year financial plan, with a focus on executing core retail fundamentals to improve the productivity of all our assets and to create shareholder value."
On the earnings call, O’Kelly said the store closings include total market exits in certain Western states and footprint optimization in other areas, including Eastern states.
Advance Auto Parts’ net loss narrowed to $6 million, or $0.10 cents a share, during its third quarter, from $62 million, or $1.04 a share, in the year-ago period. The adjusted loss came to $0.04 a share. Analysts had expected a profit of $0.49 cents a share.
Net sales fell 3.2% to $2.15 billion. Analysts had expected $2.62 billion, which included discontinued operations. Comparable-store sales fell 2.3%, missing expectations.
Advance Auto Parts lowered its full-year outlook for the second quarter in a row. The company now expects earnings per share to be a loss of $0.60 cents to breakeven, compared to its previous guidance for a per-share profit of $2.00 to $2.50. Comparable-store sales guidance was lowered to be down approximately 1% from down 1% to flat.
