While claiming that these reductions were focused on corporate, this is incorrect. They pared down their field based Pro teams as well. This should serve as one of many signals of their direction.
Advance has struggled to really compete for the last 12+ years. They’ve been a perennial follower in the aftermarket auto parts space. Attempts to penetrate the growing commercial installer space by acquiring CARQUEST/WORLDPAC have fallen short and never delivered the value or results they claimed.
A leadership team consisting largely of former Pepsi employees missed the mark as they had no clue about the auto parts business. They followed their former bias toward retail and misled the company for the last seven years.
Now, as Advance brings in another new CEO, he quickly forges a path toward a “Blended Box” strategy. This is to say that they’ll attempt to serve two ‘masters’ in a single store, single branded, Advance footprint: DIY and Pro. This strategy hasn’t worked for Advance previously and will likely fail again. Execution has been the Achilles heel for Advance for quite some time and will likely limit their ability to achieve results comparable to their peers.
Add to all of this the sale of Worldpac and large portions of the Carquest business, Advance will likely be a company consisting of 85% DIY and only 15% Pro business. All of this returns them to their pre-acquisition market positions. Autozone will continue to dominate them in the DIY space, while Advance will continue to struggle to compete against the likes of Napa and O’Reilly in the Pro space.
In the end, Advance will likely gain $3B+ from the sale of their predominantly Pro entities. Wall Street will expect them to return a good portion of that to shareholders, while new CEO likely wants to reinvest it into a severely distressed company. Interesting to see how that plays out likely in 2024 Q1. Regardless, Advance will emerge a $6.5B company largely focused on DIY, while continuing to struggle in the professional installer space.
Bumped from @5Ndov+1jUkDrTF for good info.