Advance Auto Parts revealed on Thursday that it is preparing to close over 700 locations across the United States as the company struggles to deal with a decline in consumer demand and increased expenses.
In a Thursday press release, the iconic auto part company announced that it will close 523 Advance corporate locations, 204 independent locations, and four distribution centers by the middle of next year. Advance Auto Parts also indicated that it plans to reduce the size of its workforce; however, the company did not disclose the number of jobs that will be affected by the upcoming store closures.
The announcement of over 700 store closings came as part of Advance Auto Parts’ third quarter earnings report on Thursday. According to the report, the company’s comparable store sales decreased by 2.3%. The report also showed that Advance Auto Parts has faced increased expenses “due to wage investments in frontline team members that were partially offset by a reduction in marketing expenses.”
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Advance Auto Parts also announced on Thursday that the company completed the sale of Worldpac, an auto parts wholesaler, at the beginning of the month for $1.5 billion.
“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,” Advance Auto Parts CEO Shane O’Kelly said in Thursday’s press release.
O’Kelly added, “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.”
According to Thursday’s press release, Advance Auto Parts expects that the restructuring of the company and the closing of several hundred store locations will result in a total cost of $350 million to $750 million. However, Advance Auto Parts believes that the restructuring process will increase the company’s operating income margin by more than 500 basis points through Fiscal Year 2027.
