Advance Auto Parts (AAP) has announced plans to close more than 700 stores by mid-2025 as it restructures amid weakening demand for the motor vehicle parts it sells.
The company said fewer consumers are choosing to repair their cars, trucks and SUVs, and that it needs to adjust to current market realities.
News of the store closures comes as the auto parts retailer reported a third-quarter loss of -$0.04 U.S. per share. Analysts had expected a Q3 profit of $0.49.
Advance Auto Parts revenue of $2.1 billion U.S. fell short of the $2.67 billion U.S. that was expected on Wall Street.
The company also announced the completed sale of Worldpac, a wholesale distributor of automotive parts, during the quarter for $1.5 billion U.S.
The U.S. auto industry is struggling with declining interest in electric vehicles, a pullback in consumer spending, and rising competition from Chinese automakers.
Along with its disappointing Q3 financial results, Advance Auto Parts announced plans to close 523 corporate stores, exit 204 independent locations, and shutter four distribution centres.
Management said they aim to improve their operating income margin by over 500 basis points through 2027.
The restructuring, store closures, and staff layoffs are expected to cost the company $350 million U.S. to $750 million U.S.
In terms of forward guidance, Advance Auto Parts said that it expects earnings for all this year to be a loss of -$0.60 U.S. per share to breakeven.
The stock of Advance Auto Parts is down 2% on news of the company’s Q3 print and store closures. Year-to-date, the stock has declined 34% to trade at $40.94 U.S. per share.