In a stark reflection of America’s shifting economy and consumer habits, Advance Auto Parts announced Thursday it will shutter about 500 stores by mid-2025. The move comes as part of a broader restructuring effort aimed at cutting costs and addressing a drop in demand for vehicle repairs.
For years, Advance Auto Parts has been a go-to source for car owners maintaining their vehicles. However, the company now faces challenges stemming from inflation, changing consumer spending habits, and increased competition from abroad.
The automotive industry, once a resilient sector of the American economy, is feeling the squeeze. Inflation continues to weigh heavily on families, forcing many to delay repairs or opt for cheaper alternatives. Meanwhile, Chinese automakers flood the market with budget-friendly vehicles packed with features, adding pressure on suppliers and retailers.
Advance Auto Parts isn’t the only casualty of this shift. Major suppliers like Aptiv PLC and BorgWarner recently cut their sales forecasts, citing lower vehicle production as consumers rein in spending. The entire supply chain is feeling the impact.
In a regulatory filing, Advance Auto Parts detailed its restructuring strategy, which includes:
– Closing **523 corporate-owned stores** and exiting **204 independent locations.**
– Shuttering **four distribution centers** by mid-2025.
– Reducing its workforce, though the company has yet to disclose the number of jobs affected.
The company also revealed plans to improve its adjusted operating income margin by more than 500 basis points by fiscal 2027. However, achieving this goal comes with a hefty price tag—$350 million to $750 million in restructuring costs.
Executives told analysts during a post-earnings call that the company’s third-quarter results were hit hard by several factors, including hurricanes, a slowdown in consumer spending, and disruptions caused by a cyberattack on CrowdStrike, a cybersecurity partner.
Advance Auto Parts reported an adjusted loss of 4 cents per share for the third quarter, an improvement over last year’s loss of $1.19 per share but still a concerning figure for investors.
Looking ahead, the company forecasts its 2024 earnings will range from a loss of 60 cents per share to breaking even—a sobering outlook for a business trying to regain its footing.
For many, Advance Auto Parts’ struggles are emblematic of broader economic challenges. Rising prices on everyday goods have left less room in household budgets for car repairs, a reality that’s hitting working-class Americans hardest.
At the same time, the decision to close hundreds of stores and cut jobs will ripple through communities, particularly in areas where Advance Auto Parts is a major employer. The closures highlight how inflation and global competition are reshaping not just industries but also American livelihoods.
Despite the grim news, Advance Auto Parts’ stock managed to eke out a small gain, closing at $41.20, up 0.6% on Thursday. However, the stock has tumbled 32% this year, reflecting investors’ concerns about the company’s long-term viability.
Advance Auto Parts’ store closures are a wake-up call for an industry facing mounting pressure from inflation and foreign competition. For consumers, it underscores the importance of supporting American businesses and being mindful of the broader economic forces shaping their choices.
In the end, this isn’t just a story about a struggling retailer—it’s about the changing face of American industry and the challenges we all face in adapting to it.
