Advance Auto Parts (AAP), a prominent name in the automotive aftermarket industry, has been a reliable source for auto parts and accessories for decades. However, recent developments have led many to question the company’s future. This article delves into the current state of Advance Auto Parts, examining its financial health, operational changes, and strategic responses to determine whether the company is heading toward closure or a successful turnaround.

 Advance Auto Parts Overview

Founded in 1932 and headquartered in Raleigh, North Carolina, Advance Auto Parts operates over 4,000 stores across the United States and Canada. The company serves both professional installers and DIY customers, offering a wide range of automotive products, including parts, accessories, and maintenance items. Over the years, AAP has grown through strategic acquisitions and expansions, solidifying its position in the competitive auto parts retail market.

 Is Advance Auto Parts Going Out of Business?

While Advance Auto Parts is not going out of business, it is undergoing significant restructuring efforts to address financial challenges and adapt to changing market conditions. The company has announced plans to close over 700 locations by mid-2025, including 523 corporate stores and 204 independently operated locations. Additionally, four distribution centers are set to be shuttered.

These closures are part of a broader strategy to optimize operations and improve profitability. Despite these challenges, Advance Auto Parts continues to operate thousands of stores and remains a key player in the automotive aftermarket industry.

 Financial Performance and Market Challenges

In recent years, Advance Auto Parts has faced financial difficulties, including declining sales and profitability. For the full year 2024, the company reported net sales of $9.1 billion, a decrease of 1.2% from the previous year. Comparable store sales also declined by 0.7%

The company has been impacted by various market challenges, including increased competition from online retailers and changing consumer preferences. Additionally, the automotive industry has experienced fluctuations in demand, affecting parts sales and service revenues.

 Store Closures and Operational Changes

The decision to close over 700 locations is a strategic move aimed at streamlining operations and focusing on profitable markets. The closures will result in a reduction of approximately 10% of corporate stores and 20% of independent location.

In addition to store closures, Advance Auto Parts is consolidating its distribution network. The company plans to reduce its distribution centers from 14 to 12 by the end of 2026, aiming to improve efficiency and reduce costs

 Strategic Responses and Future Outlook

To address its financial challenges and position itself for future growth, Advance Auto Parts has implemented several strategic initiatives:

• Restructuring Plan: The company has embarked on a three-year financial plan focused on improving asset productivity and creating shareholder value. This includes the closure of underperforming stores and distribution centers.

• Debt Management: In early 2025, Advance Auto Parts secured a new $1 billion loan to strengthen its balance sheet and support restructuring efforts. The loan is secured by the company’s receivables, inventory, cash deposits, and related assets

• Operational Efficiency: The company is consolidating its distribution network and investing in technology to enhance supply chain operations and customer service.

Despite these efforts, the company has lowered its full-year earnings forecast, reflecting ongoing challenges in the marketplace.

Impact on Customers and Employees

The store closures and operational changes have significant implications for both customers and employees:

• Customers: Some areas may experience reduced access to Advance Auto Parts locations, potentially leading to longer wait times for products and services. However, the company continues to operate a vast network of stores and offers online ordering options to mitigate these effects.

• Employees: The closures have resulted in job losses for some employees. Advance Auto Parts has stated its commitment to supporting affected workers through severance packages and job placement assistance.

Conclusion

Advance Auto Parts is not going out of business but is undergoing a significant transformation to address financial challenges and adapt to a changing market landscape. The company’s strategic initiatives, including store closures, debt management, and operational improvements, aim to position it for long-term success.

While the restructuring process may cause short-term disruptions, Advance Auto Parts remains a key player in the automotive aftermarket industry. Customers and employees can expect continued service and support as the company navigates this period of change.