Advance Auto Parts Inc. named a new chief executive officer and started a strategic review of the business as it struggles to keep up with inflation. The shares rose as much as 6.2%.
(Bloomberg) — Advance Auto Parts Inc. named a new chief executive officer and started a strategic review of the business as it struggles to keep up with inflation. The shares rose as much as 6.2%.
Shane O’Kelly, the head of Home Depot Inc.’s HD Supply unit, will become CEO of Advance Auto effective Sept. 11, the company said Wednesday. The aftermarket parts retailer reported quarterly profit that missed estimates and lowered its outlook for the year.
O’Kelly will replace Tom Greco, who informed the company earlier this year of his plans to retire. Advance Auto said that Greco will stay on for an unspecified period as an adviser.
“Profitability in the quarter was below expectations, primarily related to our inability to price to cover inflation,” Greco said in a statement. The company made strategic investments that helped drive comparable-store sales growth in the final four weeks of the second quarter, which continued into the third quarter, he said.
On the earnings call, Greco said that “mid-single digits” wage increases had led to improved employee retention, and supply-chain improvements increased the number of parts in stock, both of which Tony Iskander, interim chief financial officer said, would “drive productivity.” Chairman Gene Lee said that the company would take less than a year to return to profitable growth.
Advance Auto shares swung between gains and losses before the start of regular trading, and was up 3.5% at 9:40 a.m. in New York. For this year, the stock is still down 53%.
Adjusted earnings probably will shrink this year to $4.50 to $5.10 a share, the company said, down from its earlier forecast range of $6 to $6.50. Quarterly profit on that basis slumped to $1.43 a share, missing analysts’ average estimate for $1.63.
O’Kelly has more than three decades of experience in supply chain and operations. Before leading HD Supply, he was CEO of lubricant distributor PetroChoice. On the earnings call, Lee said O’Kelly was picked because he was a “car enthusiast” with exposure to big-box retail who showed “a real focus on customers.”
–With assistance from Anne Cronin.
(Updates with details from the earnings call starting in the fifth paragraph)
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