New cost reduction program is expected to generate at least $150 million in savings and the company has made a decision to focus on its blended box business model
Raleigh, N.C.—Advance Auto Parts has announced its financial results for the third quarter ending Oct. 7, and provided updates on its strategic and operational review. Shane O’Kelly, president and chief executive officer, stated in a company news release on Wednesday that Advance is initiating sale processes for Worldpac and its Canadian business.
“Since joining Advance, I have partnered with the board and management team to move with speed in conducting a comprehensive review of the business,” said O’Kelly. “We are taking decisive actions to position Advance for long-term success and create meaningful value for our shareholders. Today we are announcing initial actions from our review process that will allow us to capitalize on significant opportunities ahead.
“First, we are launching a new cost reduction program that we expect will generate at least $150 million in savings on an annualized basis. We expect to reinvest up to $50 million of these savings in our team members with a clear focus on improving the retention of our frontline team members. At the same time, we have made a strategic decision to focus on our blended box business model and are therefore initiating separate sale processes for Worldpac as well as our Canadian business.
“We are committed to stabilizing the company and returning Advance to profitable growth, and our frontline team’s passion and extensive knowledge is integral to how we succeed. Seeing our frontline team members in action delivering for customers, coupled with robust industry fundamentals and strong vendor relationships, has reaffirmed my optimism that by making rigorous strategic and operational decisions now, Advance will be well positioned to capitalize on the opportunities ahead and deliver value for shareholders.”
The company has initiated separate sale processes for the potential divestiture of Worldpac and the company’s Canada business. Worldpac is an automotive wholesale distributor of original equipment and aftermarket parts for all makes/all models. The company’s Canadian business, which predominantly serves commercial customers, goes to market under the Carquest banner.
The company has engaged Centerview Partners to assist in the sale processes. The company stated it has not set a timetable for the conclusion of the sale processes and does not intend to comment on or provide updates regarding these matters unless and until the processes are concluded or it determines that further disclosure is appropriate or required.