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Advance Auto Parts is closing more than 700 locations

  • CNN
  • November 14, 2024
New York

CNN

 — 

Advance Auto Parts is closing more than 700 locations to shore up the company's finances following another dismal earnings report.

The car parts retailer, which has about 5,000 stores, said Thursday that the closures are part of its "strategic plan to improve business performance." Advance Auto Parts (AAP) shares slid nearly 5% in premarket trading after it reported earnings that missed analysts' expectations.

The reduction will result in closing roughly 500 corporate-owned stores plus about 200 independently operated locations. The company did not immediately provide a full list of locations set to close.

Advance Auto Parts also lowered its full-year outlook for the second quarter in a row, with the company saying on its previous earnings call that "consumers continue to feel the weight of an uncertain macroeconomic climate."

The nearly century-old chain has been engaged in a turnaround plan for the past year as it tries to return to profitability and reverse sliding sales. It recently sold Worldpac, an automotive parts wholesaler, for $1.5 billion as part of "simplification" of its business model.

Major retailers have announced 6,189 store closures so far this year, already outpacing last year's total of 5,553, according to Coresight Research. Chains are on track to close the highest number of stores in 2024 than in any year since 2020, when the pandemic decimated businesses.

Closures have picked up this year because the retail sector's sugar high of 2021 and 2022, when consumers were snapping up new couches, televisions and clothing, has ended. Companies have raised prices higher than many consumers can afford and interest rates have soared, making it more expensive to borrow money for big-ticket items or to get a mortgage or a car loan. Consumers have reached their breaking point and are pulling back on items they don't absolutely need.