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Advance Auto Parts (AAP) to Close More Than 700 Stores as Demand Weakens
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Advance Auto Parts (AAP) to Close More Than 700 Stores as Demand Weakens

Story Highlights

The company has completed the sale of wholesaler Worldpac.

Advance Auto Parts (AAP) has announced plans to close more than 700 stores by mid-2025 as it restructures amid weakening demand for its motor vehicle parts.

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The North Carolina-based company said fewer consumers are choosing to repair their cars and that it needs to align its business with market realities. News of the store closures comes as the auto parts retailer reported a third-quarter loss of -$0.04 per share. Analysts had expected a Q3 profit of $0.49.

Advance Auto Parts Q3 revenue of $2.1 billion fell short of the $2.67 billion that was expected on Wall Street. The poor results and store closures arrive as the U.S. auto industry grapples with declining interest in electric vehicles, a pullback in consumer spending, and rising competition from Chinese automakers.

Cost Reductions

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 centers. Management said they aim to improve their operating income margin by over 500 basis points by the end of 2027.

The restructuring, store closures, and staff layoffs are expected to cost the company $350 million to $750 million. Advance Auto Parts also announced the completed sale of Worldpac, a wholesale distributor of automotive parts, during the quarter for $1.5 billion.

In terms of guidance, Advance Auto Parts said that it expects earnings for all of this year to be a loss of -$0.60 per share to breakeven. The stock of Advance Auto Parts has declined nearly 30% in 2024.

Is AAP Stock a Buy?

The stock of Advance Auto Parts currently has a consensus Hold rating among 16 Wall Street analysts. That rating is based on two Buy and 14 Hold recommendations made in the last three months. There are no Sell ratings on the stock. The average AAP price target of $54 implies 27.15% upside from current levels.

Read more analyst ratings on AAP stock

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