Advance Auto Parts (AAP) UBS Global Consumer and Retail Conference summary

Strategic transformation and operational initiatives

• Executed major structural changes, including selling Worldpac, consolidating distribution centers from 50 to 16, cutting headquarters headcount, and investing in frontline staff.

• Introduced Market Hubs, rejuvenated new store openings, and raised $2 billion for supply chain financing.

• Exited unprofitable markets, including California, and reduced the number of independent partners.

• Shifted focus from large-scale transformation to daily operational excellence, emphasizing the strategy of the right parts, right place, right service.

• Achieved a return to positive comparable sales and operating income for the first time in three years.

Execution, leadership, and culture

• Emphasized the importance of decisive action and consistent execution, supported by a capable leadership team.

• Implemented a new operating model to refine labor and truck allocation, and segmented labor targets at the store level.

• Improved time to serve pro customers by 10 minutes, introduced NPS measurement, and launched a new loyalty program for DIY customers.

• Focused on continuous improvement, describing the company as being in the mid-innings of its transformation.

• Invested $100 million in frontline associates and prioritized SG&A spending toward customer-facing roles.

Technology, supply chain, and merchandising

• Leveraged AI and Palantir for assortment management and dynamic pricing, adding 100,000 SKUs and optimizing inventory by geography.

• Consolidation of DCs enabled better vendor negotiations and improved supply chain efficiency.

• Achieved a 5% improvement in lines per hour during DC consolidation and rolled out new technology like Zebra devices in stores.

• Upgrading POS systems and investing in technology to unlock further productivity and process improvements.

• Private label launches and strategic sourcing contracts are expected to support gross profit expansion.