Auto Parts Giant to Shut 500 Stores, Cut Jobs Due to Slumping Demand

Auto parts retailer Advance Auto Parts has announced a significant restructuring plan. By mid-2025, the company aims to close around 500 stores and reduce some jobs. This move comes as demand for vehicle parts has decreased, with fewer people choosing to repair their cars. The automotive industry has faced challenges recently, with inflation and strong competition from affordable Chinese vehicles impacting sales. Even major suppliers like Aptiv PLC and BorgWarner have lowered their annual sales forecasts due to expected drops in vehicle production. Advance Auto Parts reported that its recent quarterly results were affected by lower consumer spending, natural disasters, and a significant outage. In a regulatory filing, the company detailed plans to close 523 corporate stores and exit 204 independent locations. They also intend to shut down four distribution centers. The company hopes to boost its adjusted operating income margin by over 500 basis points by fiscal 2027, but this restructuring will cost between $350 million and $750 million. During the third quarter, they reported an adjusted loss of 4 cents per share, compared to a loss of $1. 19 a year ago. Looking ahead, Advance Auto Parts expects 2024 earnings from continuing operations to range between a loss of 60 cents per share and breakeven. The company's stock ended the day up 0. 6% at $41. 20, but it has dropped 32% this year.