Car parts retailer Advance Auto Parts plans to close stores and cut jobs in a sweeping restructuring effort following a difficult quarter.
Advance Auto Parts has announced a major restructuring plan, including closing 727 stores and several distribution centers, after a challenging third quarter.
The auto parts retailer, which has more than 4,700 stores nationwide, announced the move on Nov. 14, while
reporting its third-quarter 2024 financial results. The restructuring is part of a broader effort to optimize the company’s footprint and improve profitability as it reported a net loss of just more than $6 million, or $0.42 per share, for the quarter.
Under the plan, the company will shutter 523 corporate-owned stores, exit 204 independently owned locations, and close four distribution centers by mid-2025. In addition to store closures, the restructuring includes job cuts, though specific numbers were not disclosed.
“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,” CEO Shane O'Kelly said in a statement.
The restructuring plan is expected to generate $60–80 million in operating income savings, according to a
slide deck accompanying the release. However, the closure of hundreds of locations is also expected to cost the company between $2.2 billion and $3 billion through 2027 due to lost revenue.
In addition, the plan is expected to incur a one-time cost of between $350 million and $750 million due factors such as write-off charges for long-lived assets being decommissioned and severance packages for employees affected by the closures. The actual figure was not specified in the report, but was stated in a call with investors, as
reported by The Wall Street Journal.
The company also provided preliminary guidance for fiscal 2025, including projected net sales of $8.4–8.6 billion, with comparable sales growth of 0.5–1.5 percent. By fiscal 2027, Advance Auto Parts expects to achieve $9 billion in annual revenue and sustain low-single-digit percentage growth in comparable sales.
Advance Auto Parts is not alone in its decision to trim its footprint. Several companies across different sectors have recently announced plans to reduce their number of locations or staff as part of broader cost-cutting and restructuring efforts.
TGI Fridays, the casual dining chain, for example,
announced in January 2024 that it would close more than 30 underperforming locations in the United States amid ongoing challenges in the restaurant industry. More recently, the company
filed for Chapter 11 bankruptcy, citing lingering challenges stemming from the COVID-19 pandemic shutdowns and shifting customer preferences.
In March 2023, Foot Locker also
announced plans to close approximately 400 underperforming mall-based stores by 2026 as part of a new strategy to reposition the company’s store base toward freestanding
locations.
