June 27, 2014

Advance Auto closing 100 stores in first round of post-merger consolidation

Advance Auto executives announced this week they are closing 100 stores as a result of a first-round of consolidation after acquiring General Parts International. The company's president said in the future "there will be a large group of consolidations."

During a meeting with analysts and investors on Wednesday, Advance Auto Parts executives were asked how many stores they expect to close as a result of the company's acquisition of Raleigh-based General Parts International.

George Sherman, Advance Auto's president, said the company is consolidating 100 stores as part of a first round of closings.

"There will be more going forward," he said. "We have to assess fully 1,200-plus stores across the country. There will be a large group of consolidations, but there will be a lot of conversations where we flip the banner and there will be some relocations."

General Parts operated 1,248 Carquest locations and had 38 distribution centers across the U.S. and Canada when it was acquired in January for $2.04 billion. The company also serviced about 1,400 independently owned Carquest locations.

Advance Auto had 4,049 stores and 12 distribution centers before the merger. The two companies combined have more than 70,000 employees.

Advance Auto CEO Darren Jackson said the company was not avoiding the question by not providing a clearer picture on the number of stores and distribution centers that might close.

"We're not trying to sidestep the question. What happens is our teammates are listening to this webcast. They are all trying to figure out is it going to be my store," he said. "So when we start talking about those things, we create disruption in the base business. So like last week when we were able to talk to our team members about closing offices, and you can bet we already had talked to the teams at those 100 stores. ... We're trying to make sure the base business doesn't get disrupted, because, again, it is not about the real estate. And we are going to need many of those teammates to come over and work in the Advance stores and in some cases go to work in the Carquest stores."

Last week Advance Auto announced a corporate restructuring where it will have some departments based in Roanoke, Va., where it has its headquarters, while other functions will be based in Raleigh. The company's executive team is to be in Raleigh.

Advance Auto was awarded a state incentives package worth more than $17.4 million if the company creates 600 jobs in Raleigh and invests more than $5 million. Some of those new jobs are expected to be General Parts employees who are simply rehired by Advance Auto.

Advance Auto also expects to lay off some General Parts employees and offer others the opportunity to relocate to Roanoke.

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