The auto parts aftermarket sector has been battling financial distress over the last year with companies considering strategic alternatives, restructurings, and in some cases filing for bankruptcy.
PartsID, which operates an e-commerce auto parts retail business, closed out 2023 by filing for Chapter 11 in December. The company sold auto parts to consumers online through various websites, such as TruckID.com, CardID.com, and CamperID.com.
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Wheel Pros, which operates as auto parts distributor and retailer Hoonigan, filed for a prepackaged Chapter 11 bankruptcy on Sept. 9 to eliminate $1.2 billion in debt and provide about $570 million in new capital through an exit facility.
Related: Another major auto parts brand files for Chapter 11 bankruptcy
Under a prepackaged bankruptcy, Wheel Pros reached agreements with its equity sponsor Clearlake Capital Group and lenders for a consensual restructuring that would hand 85% of its new equity interests to holders of first-lien claims and the remaining 15% to new first-lien lenders who will backstop the debtor's exit term loan.
Another leading manufacturer of wheels and wheel end products for commercial trucks and trailers, Accuride Corp., on Oct. 9 filed for Chapter 11 bankruptcy protection seeking a consensual restructuring of its debt to continue operating as a going concern.
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Advance Auto Parts closes over 700 stores
Finally, giant auto parts retailer Advance Auto Parts revealed that it will close 727 stores and four distribution centers and lay off a significant number of its over 65,000 workers by mid-2025 as part of a strategic turnaround plan.
Advance Auto Parts (AAP) said it will close 523 corporate-owned stores, exit 204 independent locations, and shut down four West Coast-based distribution centers as part of its asset optimization program, the company said in a Nov. 14 statement reporting its third quarter 2024 results.
The Raleigh, N.C.-based auto parts retailer operates 4,781 stores mostly in the U.S., and 1,125 independently-owned Carquest branded stores as of Oct. 5, 2024.
Related: Another giant auto parts brand files for Chapter 11 bankruptcy
The reduction of company-owned stores amounts to about 10% of its corporate stores, while the elimination of the independent locations amounts to 20% of Advance Auto Parts' non-corporate locations.
Under the strategic plan, the company will consolidate its distribution centers to 13 large facilities around the nation by 2026.
More auto parts news:
- Another iconic auto parts brand files for Chapter 11 bankruptcy
- Iconic auto parts retailer files for Chapter 11 bankruptcy
- Troubled motor oil company files for Chapter 11 bankruptcy
The company estimated in its earnings call that it would save about $60 million to $80 million in operating costs related to its store closures, but the elimination of the 727 stores would also reduce its annual net sales by about $700 million.
The company did not estimate the amount of layoffs it plans, but it said the reduction in personnel would yield about $50 million in annual savings.
The launch of its strategic plan to improve business performance follows the Nov. 1 completion of its sale of auto parts wholesaler and distributor Worldpac for $1.5 billion.
"We are pleased to have made progress on our strategic actions, including the completion of the sale of Worldpac and a comprehensive operational productivity review of our business,” CEO Shane O’Kelly said in a statement. “We are charting a clear path forward and introducing a new three-year financial plan, with a focus on executing core retail fundamentals to improve the productivity of all our assets and to create shareholder value."
Advance Auto Parts reported a $6 million loss on $2.1 billion in revenue for the third quarter ending Oct. 5, 2024, an improvement compared to a $62 million loss on $2.2 billion in revenue for the same period in 2023.
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