Advance Auto Parts (AAP) disclosed on Thursday plans to shut hundreds of stores following an unpredicted quarterly deficit. Interestingly, the shares of the company soared by as much as 10% soon after the news, even though the stock value has decreased by over a quarter this financial year.
As part of its three-year revival strategy, AAP is set to downsize its U.S. presence by closing 523 company-owned stores, withdrawing from 204 independent locations, and terminating operations at four distribution hubs. "We're crafting a transparent path ahead, launching a new three-year financial plan, focusing on executing core retail fundamentals to enhance the productivity of all our assets and increase shareholder value," stated CEO Shane O’Kelly.
In the third quarter, the retailer registered an unanticipated loss of 10 cents per share, despite projections by Visible Alpha of a 52 cent profit per share. Net sales dipped to $2.1 billion, a fall from the $2.2 billion of the previous year and short of the expected $2.67 billion.
AAP anticipates its full-year net sales from ongoing operations to approximately hit $9 billion, despite their shares having tumbled by over 30% this year.