Raleigh-based Advance Auto Parts said Wednesday it is initiating a plan to cut $150 million in costs and that it would try to sell its Canadian business and its Worldpac parts operation.
The moves are the first major steps taken by new CEO Shane O’Kelly to reverse the company’s lagging performance. He joined the auto parts retailer in September.
O’Kelly said that up to $50 million in the cost savings would be reinvested in employees, including “improving the retention of our frontline team members.”
“We are committed to stabilizing the company and returning Advance to profitable growth, and our frontline team’s passion and extensive knowledge is integral to how we succeed,” said O’Kelly in a statement. “Seeing our frontline team members in action delivering for customers, coupled with robust industry fundamentals and strong vendor relationships, has reaffirmed my optimism that by making rigorous strategic and operational decisions now, Advance will be well positioned to capitalize on the opportunities ahead and deliver value for shareholders.”
Advance also hired Ryan P. Grimsland to be its executive vice president and chief financial officer. He will start on Nov. 27 and comes from home improvement retailer Lowe’s Inc., where he was senior vice president of transformation and strategy.
Advance shares closed Wednesday at $55.67, down $2.73, or 4.7%. The stock has lost 75% of its value since hitting $239.88 on Dec. 1, 2021, and earnings for the past two quarters came in lower than Wall Street expectations.
The company reported third-quarter earnings on Wednesday that missed analyst expectations and lowered its earnings guidance for the year. The company reported a loss of $43.7 million in the quarter on $2.7 billion in sales.
The company has initiated separate sale processes for the potential sale of Worldpac and the company’s Canada business.
Worldpac is an automotive wholesale distributor of original equipment and aftermarket parts for all makes and all models.
The company’s Canadian business, which predominantly serves commercial customers, uses the Carquest brand name.
Advance operates 4,785 stores and 320 Worldpac branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands.