The auto parts retail giant has seen a spike in earnings so far this year.
According to Bloomberg, financial results for Advance Auto Parts confirm a 9 percent increase per share for the second-quarter of 2015. On Thursday, the stocks rose over $15 a share. The increase in earnings have raised a few eyebrows — especially from analysts.
However, despite the increase in earnings, Advance Auto Parts is reportedly getting ready to close down 50 stores. Stores that are under-performing are said to be the ones that will close down, according to reports. In addition, almost all the job cuts will be related to the integration of General Parts International.
The stores are expected to close by the end of 2015, as Nasdaq.com reports.
In light of unexpected increased earnings and the shutdown of many stores, Darren Jackson, CEO of Advance Auto Parts, told financial analysts of the company’s goals for the rest of 2015.
“The biggest takeaway is the need to eliminate or simplify our work and deliver what matters most to our customers. With this focus, we see an opportunity to achieve 12 percent faster, and have now challenged ourselves to get there by the end of 2016.”
Likewise, Mike Norona, Chief Financial Officer of Advance Auto Parts, gave a statement as to why closing 50 stores is a good move for the company’s future.
“While performance management will improve many of our outlier stores, closing stores is required on the chronic under performing and unprofitable stores.”
It doesn’t end there. Earlier this week, the auto parts retail giant also announced an additional 100 corporate stores to close, 50 in Roanoke — where the company’s headquarters is at — and the other 50 in Raleigh, North Carolina.
Nasdaq.com explains as follows.
“For fiscal 2015, Advance Auto Parts affirmed its forecast for comparable cash earnings in a range of $8.10 to $8.30 per share. The Street expects the company to report earnings of $8.26 per share for the year.
“AAP closed Wednesday’s trading at $172.00. In Thursday’s pre-market activity, the stock is up $0.59 or 0.34 percent to $172.59.”
Meanwhile, with Amazon being the biggest store in the world, online shopping has changed the way we spend our money. BuyAutoParts, a 2015 Inc. magazine fastest-growing seller, is the online version of Advanced Auto Parts. The company has recently generated over $42 million from online auto parts sales, according to the San Diego Biz Journal.
Some believe that since Amazon replaced stores like Radioshack, online stores could soon take over the auto parts industry as well. Although it sounds plausible, Advanced Auto Parts continues to dominate the auto parts industry, even despite all the store closings.
[Photo via Advanced Auto Parts]