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:Advance Auto Parts said on Thursday it would sell its Worldpac unit for $1.5 billion as part of its latest attempt at streamlining operations, but cut its annual results forecast, sending its shares down about 17 per cent. The company will sell the unit to private equity firm Carlyle Group in cash, and the deal is expected to close before the year-end.
On a post-earnings call, Advance CEO Shane O’Kelly said the macro environment was challenging and retailers were lowering expectations, but added the company was starting from a “lower baseline relative to the industry”.
O’Kelly took charge last year to help the company through a turnaround amid pressure from activists investors who had urged Advance to offload Worldpac, a wholesale parts distribution business with a $2.1 billion revenue for the year ended June 30.
Advance had acquired Worldpac in 2014 when it bought General Parts International.
The company also cut its annual sales and profit forecasts on Thursday after bumpy demand for auto parts and expects headwinds related to maintenance deferrals and lower discretionary spending.
Wedbush analysts said they believe the company is facing higher costs to retain and attract employees.
Advance now expects its net sales in 2024 to be between $11.15 billion and $11.25 billion, down from its prior expectations of $11.3 billion and $11.4 billion.
The company expects annual profit per share to be between $2 and $2.50, compared with the prior forecast of $3.75 and $4.25.
The North Carolina-based company’s financial performance and stock price have lagged behind rivals AutoZone and O’Reilly Automotive.
Its stock had tumbled around the time S&P Global Ratings downgraded its debt to “junk”.
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