RALEIGH — Advance Auto Parts (AAP) on Wednesday reported a third-quarter loss of $48.6 million, after reporting a profit in the same period a year earlier. And the company under its recently named CEO announced plans for cost cuts, including the elimination of about 400 positions, as well as the sale of two business units. A new chief financial officer is joining management as well plus its top ecommerce spot is being eliminated.
Its shares have fallen 60% since the beginning of the year. The stock has fallen 68% in the last 12 months.
“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 Shane O’Kelly, the CEO hired three months ago. “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.”
The businesses’ focus is online sales.
Advance also is eliminating its executive vice president, merchandising, marketing and e-commerce. The exec holding that job – Jason McDonell – will leave the company Dec. 1. The additional cuts will come at the company’s Raleigh headquarters, in field-based positions outside of Raleigh and in corporate roles outside of North Carolina, the company said.
On a per-share basis, the Raleigh-based company said it had a loss of 82 cents.
The results missed Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.42 per share.
The auto parts retailer posted revenue of $2.72 billion in the period, which beat Street forecasts. Eight analysts surveyed by Zacks expected $2.68 billion.
Advance Auto Parts expects full-year earnings to be $1.40 to $1.80 per share, with revenue in the range of $11.25 billion to $11.3 billion.
Advance also said it hired Ryan Grimsland as executive vice president and chief financial officer as of Nov. 27.
According to an SEC filing, Grimsland will be paid a salary of $675,000 and a sign-on equity award valued at $1.6 million.
Tony Iskander, interim CFO since August, will continue in his role as senior vice president, finance and treasurer, the company said.
About Grimsland, who is 46, the company said he “brings more than 20 years of corporate finance, treasury, financial planning, and retail strategy and transformation experience. Most recently, Mr. Grimsland served as senior vice president, strategy and transformation at Lowe’s Companies, Inc. During his 17-year tenure at Lowe’s he held leadership roles across all aspects of the finance organization, including senior vice president, corporate finance and treasurer; vice president, corporate financial planning and analysis; and vice president, stores finance. Prior to joining Lowe’s, he held positions in operations and finance at Haverty’s Furniture and UBS. Mr. Grimsland earned an MBA in accounting from Benedictine University and a bachelor’s degree in business administration from High Point University.”
The Associated Press contributed to this report.