Most retail operators dread economic downturns, which usually lead to a decline in sales and can result in financial distress.
Retail businesses will seek to implement strategic alternatives such as marketing strategies, restructurings, and divestitures to help turn around a business. In more desperate situations, companies might reorganize in a Chapter 11 bankruptcy or liquidate in a Chapter 7 filing.
In some cases, businesses can benefit during economic downturns. The automotive aftermarket sector, on occasion, has experienced the opposite effect in economic downturns, as some businesses have had an increase in sales during hard times, according to a 2022 report from KPMG.
Related: Huge auto parts chain closes over 700 stores
Automobile owners often purchase auto parts to repair and maintain their vehicles during economic downturns instead of taking on the larger expense of buying a new car, which fuels the auto parts aftermarket sector.
Several auto parts retailers have already taken action in the last year to strengthen their businesses by launching restructurings.
Wheel Pros, which operates as auto parts distributor and retailer Hoonigan, filed for a prepackaged Chapter 11 bankruptcy on Sept. 9, 2024, handing 85% of its new equity interests to holders of first-lien claims and the remaining 15% to new first-lien lenders who will backstop the debtor’s exit term loan.
The restructuring plan would eliminate $1.2 billion in debt and provide about $570 million in new capital through an exit facility.
Accuride Corp., which also manufactures wheels and wheel end products for commercial trucks and trailers, filed for Chapter 11 bankruptcy protection on Oct. 9, 2024, seeking a consensual restructuring of its debt to continue operating as a going concern.
Advance Auto Parts closed over 700 stores by the end of March.
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Advance Auto Parts opens new stores
And now, Advance Auto Parts (AAP) , a leading U.S. automotive parts aftermarket provider, revealed that it is transitioning from the store closure phase of its strategic turnaround plan and entering a period of growth by opening 30 new stores in 2025.
Related: Struggling discount retail chain closes over 100 stores
The auto parts retail chain plans to expand its growth phase and open at least an additional 100 new locations through 2027, it said in a March 26 statement.
More closings:
Popular retail chain to close unprofitable store locationsBankrupt retail chain unloads store leases, key assetPopular discount retailer files bankruptcy, closes all stores
The Raleigh, N.C., auto parts retailer, which operated 4,788 Advance Auto stores and 934 independently owned Carquest branded stores as of Dec. 28, 2024, revealed in November 2024 that it would close 727 corporate-owned and independent locations, as well as four West Coast distribution centers by the end of March 2025.
The company completed its store closure phase and has returned to a growth phase, it said in the statement.
Following the optimization of its retail footprint, 75% of the company’s stores are in markets where the store has the No. 1 or No. 2 position based on store density, the company said.
Advance Auto Parts opens new locations
In 2025, Advance Auto has so far opened six stores in Florida, New Jersey, Tennessee, and Virginia. Over the next several months, it plans to open more locations in Florida, Illinois, Maryland, Ohio, Virginia, and Wisconsin.
Advance Auto previously announced an incremental capital expenditure plan that includes
additional investments in existing stores related to IT infrastructure, equipment, store repairs, and improved inventory and delivery. Advance is also providing additional training to team members to enhance customer experience, according to the statement.
Related: After bankruptcy, defunct retail chain relaunches operations
