Advance Auto CEO to retire as growth slows down
Advance Auto Parts announced its CEO is stepping down as the retailer also reported a decline in third quarter profit and nearly flat same-store sales.
The auto parts retailer reported that for the third quarter ended Oct. 10, same-store sales increased .5%. Profit declined 1.4% to $120.5 million, or $1.63 per share. Revenue ticked up slightly to $2.3 billion.
“I would like to thank all our team members for their hard work during the third quarter of 2015,” said Darren R. Jackson, CEO. “These results were unfavorably impacted by the continuing demands of the general parts integration as well as some headwinds due to foreign exchange. We remain focused on structurally improving our business and progressing through our integration milestones to position the company for long term growth."
The company also announced that Jackson is retiring effective Jan. 2, and will be replaced by interim CEO George Sherman, who will also retain his position as president of the company. Also, the company named Starboard Value LP CEO Jeffrey C. Smith to its board of directors, expanding the board to 13 members.
Total sales for the third quarter increased 0.3% to $2.30 billion, as compared with total sales during the third quarter of fiscal 2014 of $2.29 billion.
“Our teams once again delivered on our synergy expectations and demonstrated continued G&A expense discipline to grow our comparable operating Income 2.9% in the quarter despite softer top-line performance,” said Mike Norona, executive VP and CFO. “Our third quarter reflected ongoing demands from our integration activities, and we expect our earnings will be pressured for the remainder of the year due to these continued integration impacts. That said, we remain focused on making the necessary changes to the business and delivering our comparable operating income target of 12% in 2016.”
Looking ahead to 2016, Norona said: "Given our third quarter earnings shortfall coupled with continuing integration headwinds and the soft start to our lowest volume fourth quarter, we are revising our full year comparable cash EPS down to $7.75 to $7.90,. This revised outlook assumes flat to slightly negative fourth quarter comparable store sales, roughly flat year over year fourth quarter gross margin rate and achievement of our full year synergies estimate of between $45 million and $55 million for the full year."
Additionally, as part of its ongoing process of store evaluations, the company said it has further identified and is subsequently planning to close an additional 30 stores in the latter part of 2015.
"Looking ahead, I welcome the opportunity and look forward to working with our teams to realize the full potential of our company that both we and our shareholders expect," said George Sherman, president. "We are on course to combine as one company and are making the right foundational investments this year and are confident this positions us to achieve our business objectives in 2016 and beyond. That said, we must have relentless bias for action and a higher level of accountability than we have to date to ensure consistent execution at all levels and deliver the necessary improvements to our business performance which I am confident is within our sights."
As of Oct. 10, the company operated 5,240 stores.