Advance Auto Parts is taking decisive action to reverse its growing losses by closing over 725 stores nationwide, including a significant reduction of its footprint on the West Coast. The move will lead to the company exiting certain markets in California and the Pacific Northwest, according to CEO Shane O’Kelly during a recent earnings call.
The North Carolina-based auto parts retailer will also shut down four distribution centers on the West Coast. While O’Kelly did not specify which locations would be affected, he indicated that the closures would primarily target stores reliant on those distribution centers, which serve fewer stores compared to other parts of the country.
“Our four distribution centers on the West Coast support a lower concentration of stores,” O’Kelly said. “We believe redirecting investment toward other areas of the business will drive stronger profitability.”
Advance Auto Parts operates about 4,700 stores across the U.S., along with 1,100 independently operated locations in the U.S., Canada, Mexico, and the Caribbean. However, O’Kelly confirmed that operations in Canada would remain unaffected by the closures. In California alone, the company has 139 locations.
The company’s decision to scale back its presence in the West Coast comes as part of a broader strategy to focus on more profitable regions and streamline its supply chain. Industry analysts point to supply chain inefficiencies as a key challenge for Advance Auto Parts. Unlike competitors such as O’Reilly Auto Parts, which receives daily shipments, Advance Auto Parts typically receives deliveries once a week from its distribution centers.
Bret Jordan, a research analyst at Jefferies, said the West Coast reduction was a clear effort to exit regions where the company struggles to achieve an effective supply chain. “They’re cutting out the least profitable markets in a bid to improve profitability across the company,” Jordan explained.
The store closures are part of Advance Auto Parts’ “strategic plan to improve business performance,” outlined in the company’s latest quarterly earnings report. The company also plans to ramp up the opening of new stores in more profitable regions.
Despite the downsizing, Advance Auto Parts reported a smaller net loss of $6 million for the third quarter of this year, compared to a loss of $62 million in the same period last year. Revenue for the quarter was $2.1 billion, slightly down from $2.2 billion in 2023. However, the company’s stock has struggled, closing at $38.69 on Thursday—a decline of more than 37% year-to-date.
In another major move, Advance Auto Parts completed the $1.5-billion sale of its Worldpac business, a wholesale car parts distributor, to the investment firm Carlyle earlier this month.
