By Nicole Giannopoulos
Coming off the tails of a successful 2013, Advance Auto Parts looks at 2014 with optimism. The retailer is planning for CapEx investments of $350 million, including supply chain enhancements, store systems upgrades, new stores, and an additional $60 million investment in the integration of the General Parts acquisition.
“In 2014, we begin the never-ending mission of being the best,” said Darren Jackson, Advance Auto Parts CEO on a recent call with analysts. “We will build on those successes that have gotten us to where we are today and continue to invest in those areas that will drive our sales growth, customer service excellence and profit outcomes.”
Supply chain and availability work continues, and progress continues to be made on: the Remington Distribution Center, hub store initiatives, and updates on the retailer’s focus on inventory availability.
First, the goal is to service 400 stores through the Remington distribution facility. The retailer has not only met that objective, but has modestly exceeded it. Of those 400-plus stores being serviced, there are 178 stores that are receiving daily replenishment. Daily replenishment continues to be a priority and aligns with Advance Auto’s objective of driving availability and breadth of assortment. Further expansion of the daily delivery program will be considered, as well as a more holistic distribution network assessment study that will be conducted in light of the recent acquisition and the 38 new General Parts distribution centers Advance now operates.
Second, during the quarter the retailer added four hub stores either through new stores or the upgrade of existing stores, strategically located to operate these hubs. Third, inventory growth was up 10.7% year-over-year, primarily due to the increase in new store openings, the increase in hub stores and the ramp-up of the Remington Distribution Center.
The retailer is focused on improving business profitability by investing in its import business. Today, WORLDPAC, together with Autoparts International, positions the retailer as the leader in the import market, the fastest-growing automotive segment. The addressable market for imports continues to grow at a faster rate than domestic vehicles, based on vehicle registrations and Advance Auto looks to accelerate its leadership position in this segment.
On January 2, 2014, Advance Auto closed the General Parts acquisition, a historic day for the retailer. This investment positions Advance for leadership in the industry while broadening and accelerating its growth strategy. The retailer’s 80-year history has been a story of growth and adapting to the changing industry and customer needs. This combination is a strategic step forward for the company.
The focus in 2013 was managing cost to the slower sales environment and making the necessary trade-offs as it balanced profit management of DIY business while continuing to invest in customers in key areas of the business. Delivery speed and reliability continue to improve across the board as the retailer continues to drive improvements in market availability and assortment through the support of 374 hub stores and the positive impact from its daily delivery capabilities. Keep Reading…
Article Source: : SC Retail