Advance Auto Parts, one of the nation’s leading automotive aftermarket parts retailers, has announced a sweeping plan to close 727 stores and four logistics centers by 2027. The drastic measure is part of a new three-year strategy to stabilize the company’s finances, improve productivity, and stave off its impending bankruptcy.
The closures, which will begin in earnest in 2025, are part of a restructuring effort to address mounting financial challenges. CEO Shane O’Kelly described the plan as essential for creating “a clearer strategic direction,” emphasizing the company’s renewed focus on core retail operations and operational efficiency. By the end of 2026, Advance Auto Parts plans to consolidate its logistics network, reducing its footprint to 13 larger distribution centers, while also closing 523 corporate stores and exiting 204 additional locations.
The decision comes on the heels of disappointing financial results. While gross profits increased by 11% in the third quarter of 2024, the company experienced declining revenues, high operating costs, and a diluted loss per share of $0.42. These results prompted the second downward revision of Advance Auto Parts’ annual earnings forecast, causing a 5% drop in its stock price.
To help stabilize its operations, the company recently completed the sale of its Worldpac business for $1.5 billion, allowing it to focus solely on its retail and distribution functions. Looking ahead, the retailer is aiming for an adjusted operating income margin of 7% and a debt leverage ratio of 2.5x by 2027. These targets represent what can only be described as ambitious growth in an increasingly competitive auto parts market.
Midwest Impact: Iowa, Illinois, and Wisconsin
The Midwest is home to a significant number of Advance Auto Parts stores, with some locations likely to be affected by the closures. Iowa, for instance, has 37 stores, including six in Des Moines and others in nearby areas like Ankeny and Urbandale. In Illinois, the company operates 152 locations, making it one of its largest markets. Chicago alone accounts for 19 stores, with many others scattered throughout the state. Wisconsin hosts 41 locations, serving cities like Milwaukee, Green Bay, and Appleton, with services like battery installation, oil recycling, and engine diagnostics.
These closures could leave gaps in service for DIY auto enthusiasts and professional mechanics alike. The exact impact on individual communities remains uncertain, but given the scale of the restructuring, both employees and customers in the region are bracing for significant changes.
Additionally, Advance Auto Parts has yet to disclose how many employees will be affected by the store and distribution center closures, but significant layoffs are expected. This announcement comes at a time when the automotive industry is grappling with widespread job cuts. For example, General Motors recently reported nearly 5,000 layoffs in 2024 alone…