As inventory and supply chain issues slowly dissipate, aftermarket auto parts retailer Advance Auto Parts showed incremental growth at the end of 2022.
Reporting Q4 2022 earnings on Tues. (Feb. 28), Advance Auto Parts management took a positive outlook on 2023 despite lingering uncertainty about the year to come.
“In 2022, our team members once again worked to serve our customers with relentless focus and dedication. Despite challenges throughout 2022, we made progress on our strategic initiatives, including the expansion of our footprint, further strengthening of our DieHard brand and improved customer loyalty,” said Tom Greco, president and CEO.
He added that “we are not satisfied with our results in 2022 and are taking decisive actions to improve performance in 2023. Importantly, the disciplined inventory and pricing actions we discussed last quarter to adapt to an evolving competitive landscape contributed to stronger results in Q4 and we ended the year with positive momentum.”
Responding to an analyst’s question on its Pro business, Greco said, “We feel very well positioned to execute the next generation of our go-to-market strategy. Our vision is really to leverage the entirety of our enterprise assets to provide a superior customer experience within Pro as we accelerate growth and profitability.”
Greco noted that a consolidation of supply chain components and technology platforms will benefit retailers going forward. “In the past, they just weren’t as connected as they are today. We used to have four disparate supply chains, four technology platforms. That’s all behind us.”
Addressing underperformance in its Pro sales, Greco added that “we expect Pro to accelerate through the year,” outlining three core elements to that including better inventory availability from “targeted inventory investments to improve that,” a focus on high-velocity SKUs, and “a pretty robust customer sales activation plan that the field,” he said.
On the DIY side, Greco said “it’s a very profitable part of our business. We paid a lot of attention to it. We had a strong quarter on Diehard, and we continue to build that brand. Our Speed Perks platform is really starting to generate some returns for us. We’ve added members, we’re graduating members. And by the way, our eCommerce business is now back in double-digit land which is really important for us over the long term. So, we think we can continue to grow that DIY business as we get into 2023.”
Greco is retiring as CEO at the end of 2023.
At the end of Q4 2022, Advance’s store count was 4,770 including 316 Worldpac branches primarily in the U.S., and it also served 1,311 independently owned Carquest branded stores.
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