Advance Auto Parts to Shutter More Than 600 Stores, Four Distribution Centers
Advance Auto Parts is set to close 523 corporate stores and exit 204 independent locations as part of a multi-year strategy to boost profitability and streamline operations. The company revealed the closures during its quarterly investors call last week, alongside plans to consolidate its warehouse footprint and open 60 new locations by 2027.
The auto parts retailer also disclosed plans to shutter four distribution centers and consolidate its warehouse operations into 13 facilities by 2026, aiming to reduce costs and improve efficiencies.
The announcements come amid a 3% year-over-year decline in net sales, which totaled $2.1 billion in the third quarter. Sales at existing locations dropped by 2.3%, a decline management partially attributed to soft consumer spending.
“Our store and server systems were impacted by the global CrowdStrike system outage, which temporarily prevented stores from serving customers and completing transactions,” said Ryan Grimsland, CFO of Advance Auto Parts. “Later in the quarter, Hurricane Helene impacted sales at over 300 stores. We estimate both these events combined accounted for approximately a 50 basis point headwind to Q3 comparable sales. Without these events, our two-year comparable sales growth would have been about in line with the second quarter and our expectations.”
Advance Auto Parts also disclosed that the roughly 700 stores slated for closure will be dilutive to annual operating income by $60 to $80 million. The closures are expected to be completed by mid-2025.
While management pointed to broader economic factors like inflation, unemployment, and shifting consumer behavior for some of the sales decline, the retailer has undergone a sizable transformation in recent years. The company recently completed the sale of Worldpac for $1.5 billion, boosting its liquidity and positioning it to further invest in growth and operational improvements.
Additionally, Advance Auto Parts announced plans to eliminate certain roles across the firm, which is expected to generate around $50 million in annualized savings. These efforts are part of a broader strategy to streamline operations and drive stronger profitability in the coming years.
The retail sector as a whole continues to face significant pressure to cut costs and adapt to evolving consumer behavior. According to Coresight Research, major retailers have announced 6,189 store closures so far this year, a sharp increase compared to the 5,553 store closures recorded in 2023.