Advance Auto Parts Puts Foot On Turnaround Gas With 200 Store Closures

Core Viewpoint - Advance Auto Parts is implementing a strategic plan to improve business performance by closing over 200 locations and selling its Worldpac subsidiary to the Carlyle Group, aiming for long-term profitability and operational efficiency [1][4][6]. Group 1: Store Closures and Financial Impact - The company announced plans to close 523 corporate and 204 independent locations, estimating total costs from these closures to be between $350 million and$750 million, with completion expected by mid-2025 [2][3]. - Advance Auto Parts has around 4,500 corporate stores in the U.S. and has engaged Hilco Real Estate to manage the sale of both owned and leased real estate assets across 46 states [3][4]. - The initial phase involves disposing of over 200 leased and 24 owned locations as part of a broader effort to return to profitability and reverse declining sales [4][5]. Group 2: Financial Performance - In the third quarter, the company reported a net loss of $6 million, or$0.10 per share, a significant improvement from a loss of $62 million, or$1.04 per share, in the same period the previous year [5]. - Net sales fell by 3.2% to $2.15 billion, which was below analyst expectations of$2.62 billion, and comparable-store sales decreased by 2.3% [5][6]. Group 3: Strategic Direction - The management has introduced a new three-year financial plan focusing on core retail fundamentals to enhance asset productivity and create shareholder value [6][7]. - The turnaround strategy is built on three key pillars: optimizing store operations, achieving supply chain efficiency, and improving in-store merchandising [8]. - Despite a nearly 30% decline in stock value over the past year, recent clarity in the management's turnaround plan has encouraged investors [7].