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

Automotive parts retailer Advance Auto Parts is hoping that less is more as it moves forward with plans to shutter over 200 locations as it begins to downsize its nationwide store footprint.

In November last year, Advance Auto announced that it planned to close 523 corporate and 204 independent locations as part of what it called a “strategic plan to improve business performance with a focus on core retail improvements” as it looked to a long-term plan to turn business prospects around.

Headquartered in Raleigh, North Carolina, the company estimates total costs of $350 million to $750 million from the total planned store closures, which are expected to be completed by mid-2025.

Advance has around 4,500 corporate stores across the U.S. and the company has hired corporate recovery specialist Hilco Real Estate to handle the sale of its real estate assets — both owned and leased outlets — which are located across 46 states throughout the U.S.

In the initial phase, Hilco is to manage the disposal of over 200 leased and 24 owned locations after Advance Auto first announced that it had been working to turnaround its business to return to profitability and reverse falling sales. In November, it completed the sale of automotive parts wholesaler Worldpac to global investment firm Carlyle for $1.5 billion as part of a rationalizaton of its business model.

Advance Auto Parts Results

Advance Auto Parts’ net losses 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-prior period. Net sales fell 3.2% to $2.15 billion, significantly below analyst expectations of $2.62 billion, which had included discontinued operations. Comparable-store sales also fell by 2.3%, again missing Street expectations.

At the time, Advance Auto Parts lowered its full-year outlook for the second quarter in a row, with comparable-store sales guidance down approximately 1% from previously anticipated flat sales.

“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,” Shane O’Kelly, Advance Auto Parts president and CEO, said in November. “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.”

Advance Auto Parts Turnaround

O’Kelly said during a November earnings call: “We made the decision to close certain non-performing, non-strategic stores in the U.S. to better position our asset base for long-term, sustainable growth.”

Shares in Advance Auto Parts are down nearly 30% over the past 12 months, although the stock value has rallied from a low in fall 2024. Investors appear to be encouraged by the clarity of the management turnaround plan, which has identified specific operational pain points within the business and laid out a multi-year turnaround strategy.

The three key pillars of its current strategy include optimizing store operations, of which the upcoming closures form a part, achieving supply chain efficiency, and improving merchandizing in-store.

Deadlines for offers on the leased and owned locations on the market are March of this year.