Advance Auto Parts: A Rocky Road Ahead
The once-revered Advance Auto Parts, the go-to for automotive needs, is going to see fewer of its neon-lit stores dotting the landscape in the coming years. The company has made the tough decision to close more than 700 locations by 2027. Why? Well, it seems like they’ve had their fair share of disappointing earnings reports lately, prompting some major restructuring.
The Numbers Don’t Lie
According to an official press release, even though gross profits ticked up by 11 percent in the third quarter, the cloud of rising operating expenses and declining net sales looms large over this Raleigh, North Carolina-based giant. The company has been treading water lately, with previous quarters showing flat earnings in Q2 and an actual drop in Q1.
Shane O’Kelly, the man at the helm as president and CEO, insists they are “charting a clear path forward.” O’Kelly elaborated that the focus is now on executing retail fundamentals aimed at enhancing asset productivity and creating shareholder value. In simpler terms, they’re rolling up their sleeves and getting back to the basics to stay afloat in turbulent waters.
A Shift in Strategy
Now, here’s the kicker: this is the second consecutive quarter where Advance has had to lower its full-year profit outlook. Following their latest earnings presentation, shares took a notable 5 percent dive. As part of a refreshing “strategic plan to improve business performance,” which will stretch through 2027, the company is set on trimming its U.S. retail footprint. Here’s a quick breakdown:
- Closing 523 corporate stores
- Pulling out from 204 independent locations
- Shutting down four distribution centers
Additionally, they’re in for another wave of supply chain optimization, aiming to consolidate distribution centers into 13 major facilities by 2026 and open 60 market-hub locations by mid-2027
Roots Run Deep
Let’s not forget, Advance Auto Parts has been around since 1932. With 4,781 stores in the U.S. and over 1,125 Carquest locations serving a mix of independently owned shops and other territories like Canada and the U.S. Virgin Islands, their footprint has been sprawling. But as of October 5, 2024, those numbers may dwindle.
And here’s where the plot thickens: Advance has kept mum about which exact locations are on the chopping block. So, for employees and customers alike, there’s a tense cloud of uncertainty hanging in the air.
What They Offer
Despite the ups and downs, Advance remains one of the leading retailers in the automotive aftermarket. They cater to everyone from professional installers to do-it-yourself enthusiasts, providing an array of products ranging from batteries to car wash supplies and even air fresheners. Not to forget, they’ve dipped their toes into motorsports, having sponsored NHRA Funny Car teams and notably becoming the official sponsor of the IndyCar checkered flag through the 2025 racing season. Yes, just the flag—it’s a niche role, but hey, at least they’ve got something to wave about.
As the company steers through these choppy waters, the spotlight will be on whether their bold new strategies can salvage their shrinking empire.