Advance Auto Parts Reports $9.1 Billion in Net Sales, Faces Operating Loss in Fiscal Year 2024

Advance Auto Parts, Inc. reported a challenging fiscal year ending December 28, 2024, with net sales from continuing operations totaling $9.1 billion, a decrease of 1.2% compared to $9.2 billion in 2023. The decline was attributed to strategic pricing investments and a decrease in sales volume, partially offset by a favorable product mix. The company's gross profit margin also fell significantly, dropping to 37.5% from 41.9% in the previous year, primarily due to $431.5 million in inventory-related charges linked to store closures and inventory streamlining as part of the 2024 Restructuring Plan.

The company experienced a substantial operating loss of $713.3 million, a decrease of $752.2 million from the previous year, largely driven by the decline in gross margin and impairment of long-lived assets. The diluted loss per share from continuing operations was reported at $9.80, compared to a loss of $0.50 in 2023. In contrast, net income from discontinued operations, primarily from the recently sold Worldpac business, was $251.2 million, reflecting a strategic shift in the company’s focus.

In terms of operational changes, Advance Auto Parts completed the sale of its Worldpac business on November 1, 2024, for net proceeds of approximately $1.47 billion. This divestiture is part of a broader strategy to enhance the company's focus on its core operations. Additionally, the company announced a restructuring plan aimed at improving profitability, which includes the closure of approximately 500 stores and 200 independent locations by mid-2025, alongside headcount reductions.

As of the end of the fiscal year, Advance Auto Parts operated 4,788 stores, a slight increase from 4,786 in the previous year. The company employed approximately 33,200 full-time and 29,600 part-time team members. The restructuring plan is expected to incur additional expenses of $225 million to $275 million, primarily related to lease terminations and other exit costs. The company anticipates that these strategic initiatives will position it for improved performance in the future.

Looking ahead, Advance Auto Parts remains focused on enhancing its operational efficiency and customer experience. The company is optimistic about its long-term growth prospects in the automotive aftermarket industry, despite the current challenges posed by macroeconomic factors and competitive pressures. The management's ongoing efforts to streamline operations and optimize its supply chain are expected to contribute positively to the company's financial health in the coming years.