AAP - Earnings call transcript Q2 2018 | Advance Auto Parts, Inc.

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Operator

Welcome to the Advance Auto Parts Second Quarter 2018 Conference Call.

Before we begin, Elisabeth Eisleben, Vice President, Investor Relations will make a brief statement concerning forward-looking statements that will be made on this call.

Elisabeth Eisleben

Good morning and thank you for joining us to discuss our second quarter 2018 results. I am joined by Tom Greco, our President and Chief Executive Officer; Jeff Shepherd, our Executive Vice President and Chief Financial Officer; Bob Cushing, our Executive Vice President of Professional; and Mike Broderick, our Executive Vice President, Merchandising and Store Operations Support.

Following their prepared remarks, we will turn our attention to answering your questions.

of advised be comments to deemed Securities Reform be statements may the begin, Litigation may that forward-looking Act we that today our include Private Before XXXX. statements pursuant

maintain materially forward-looking Exchange While actual due a our Commission filings described and of number with those statements are we in and which the such on to uncertainties, from no risks in results update statements projected the made. duty differ to may company's Securities website, and

measures. financial statements non-GAAP refer certain and in contained additional governed include measures today comments today's The and press the financial earnings our quarterly our referenced our accompanying details and call. be release by financial content issued Please the financial press of statements Additionally, related release statements. to for non-GAAP of information reconciliation in will regarding this the forward-looking today call

me Now turn over Greco. call let to the Tom

Thomas R. Greco

Elisabeth and morning. good Thanks,

of Carquest Reuben network read and in thrilled entire working our Vice with Shepherd performance work roles press very I begin delivered exciting yesterday's will and AAP quarter. we release further team as Chain. their to Jeff Slone as I excited team and who well of that Chief context momentarily. would the in recognizing strong like hard am Executive President forward by been the you the new I provide has I as changes these on independents, balanced to Financial begin as our President, Officer Vice Reuben I am Before in leadership joining and look Supply Jeff also in appointed announce is to October Executive

drive win performance narrow the the gap and which is We are raising significantly game our enabling growth, us industry. versus to execution business, on

X.X% improvement and cash by our working addition net capital $X.X substantial sales were In growth line enabled billion cost X.X%. year-over-year up sales comparable flow. the and increased has to quarter and control bottom second in on In focus

basis $X.XX. XX prior X.X% our income per to adjusted quarter and operating earnings of points adjusted year the compared XX.X% Our increased margin to increased share

was XXXX, an increase through Our first X.X cash year-over-year million times. six flow the free $XXX of million than more $XXX months of

stack position independent will on significant a and capital highest enabled along and increased improvement transaction execution both our relative resulted on the our the allocation per values. in on and members Jeff partners growth with focus at two-year by in a result team basis cash escalated AAP level units our XXXX GPI discuss as in more the the one- has plans acquisition, and ticket later Our is increased and call. An financials details since

in of precipitation In averages. addition, winters, both experienced were following two and consecutive the we closer winter to which mild years historical particularly temperatures

indicated season in quarter our saw across customers increased we in on latter will batteries of first believe to single-digits. of our performance grew positively repairs. which From from sales our the perspective and Early the quarter. category previously we brakes remainder the for start a delayed XXXX saw we which benefit part QX DIY sales impact our the demand As many business Professional and hindered investments continue spring in as selling delayed increased in AAP QX, call of in the however, we categories mid

with improvement right leveraging leveraged long-term substantial In addition analytical versus the partnerships inventory of early we we previous vendor undercar delivered management the run as capabilities. a new help rates in engine deployment and to

sequential with the optics. compared appearance chemicals, Gulf to spring, start such and improvements as regions. and growth the We Finally related Midwest, of we spring in in growth due to in Southwest, nearly Coast delayed all largest the accelerated improvement saw regions performance maintenance, experienced QX with our strong categories Appalachian, geographic to

organization. our approach bottom the we to the disciplined in entire line, control across remain Turning to expenses

improved service we SG&A adjusted struggled team increased by as where this managers, to QX our daily large points our establishing results lower to cost increased clear prior at granular in members prior XX we in to absolute of additional reduce our performance our for their line quarter. training the expectations, percent recognize sales total, and adjusted years customer and costs, tools in than leveraged Unlike performance. basis operations basis ability manage with an cost leverage to store I a SG&A level providing tracking year-over-year, year. and our dollar hours on field want sales While were for general costs In the a

we QX. on from remain year, updated optimistic our for momentum our you'll in the sustaining line As on Jeff top expectations hear and QX

evidenced unplanned and headwinds as execution help With said and of QX for results our on planned remain focus the addition in will impacting committed plan have results year. offset that our the balance control long-term of In line several we headways the initiatives. to on our bottom cost made

roll the converted our platform, of Proposition. in professional Advance out Pro Value In Professional e-commerce this quarter. of to of business, existing ahead terms the continued plans platform disruption and We've without Customer second Professional our our Advance our our customers of initial now all we to

dollars We customers driving Professional business. that platform. per transaction feedback love Pro they from positive the It's Advance higher conversion received and increased across rates have new average our

in one great faster driving to sunset job did completion system Our simultaneously business. Professional rollout, accelerating with a the we were and growth our while able team members

the In visibility, saw full in completed. banner entire and often. what this assortment excited for conversion was addition, since about of us With rates customers, say an banner we the future rollout means of which growth. for our sale QX quarter cross to trends I'm and we visibility quarter accessibility With yes, and first breadth was higher more expand enabled quality market positive and the close of the cross

improvement stores, and value improvement customers, we've online and our improving emphasis hold terms For of In in taking our among key our members team DIY was indicators. proposition on both in the seen of QX marked performance. one our retail customer is performance

XX oil, batteries, transaction which and the increased of per drive improvement ticket QX, drove motor we like in that in weeks This categories XX appearance grew value. chemicals. key traffic average in enabled In fact, units

terms of momentum This grew our and rate. gain In our significantly experience loyalty. we're visitors conversion customers as omnichannel, improved while we online website bringing to into driving continue means sustaining new to our DIY

Importantly engagement we're our in in experience ship-to-home strengthen improvements omnichannel and a we which e-commerce stores. speed best is coverage on expanded made online Across our notable broadly impacting providing we and class positively as customer both to DIY delivery growth. focused

supply continue Moving strategic initiatives we supply execute on chain. to streamline chain end-to-end to our to

by cost end end quarter as and To closing year. to anticipate Gallman began our we distribution the that announced confident efficiency our the process long-term network. distribution are we detailed have have plan the last completing achieve will reductions and We and of deployed optimize of center this a

Additionally that internally recently be we will closing we our announced Antonio San DC.

Consistent As our of close team this with transformation assistance critical transition. expect providing the supply our San the is Antonio implementation with and the to committed pleased of with success year. to San to date. impacted members Antonio our Gallman, Gallman, progress during we're end The chain with we to we're by facility our

talents on and the be that that retire yesterday confident Keating lead this announced the expertise and and in Leslie and grateful we built tremendous I maximize of career. thrilled will chain a strategy, these will our she has her year. chain am year work Advance to supply lead Advance. are a finding during better service, reduce development Reuben the end-to-end joined in in team position resources the strategy Leslie led cost, Advance and have strengthen the for class I'm transformation. the us chain As capabilities, from leadership and transition. successor. retirement improve enables her key within future supply end thankful our for Advance Slone for XX following objectives; supply important at leverage supply of seamless three team, to objectives She she's This assist from leadership of of taking her to world customer our success. came robust successful us a each part and chain with delivered Leslie the plan

well a expert responsible chain a her served deserved Chain on record best the October. join her Advance familiar retirement, very on will the Board our ensure proven Supply will as wish XXXX, and supply will Leslie of in intimately and Vice transition. Slone efforts. with While a end supply in to seamless is for be Executive track we through with since the President, function. is Having Reuben Reuben respected procurement chain year operations transformation our much our stay Reuben

Supply is management from transportation, where Walgreens In served impressive Vice joined and He operations, addition six Senior for distribution as to imports, background Chain us center years and experience and logistics. business. responsible and our relevant his he inventory replenishment, President, extremely

engagement in fulfillment. This is experience. to fulfillment brings in capabilities with us Reuben class best we best exciting extensive customer continue develop as Importantly omnichannel very for class

highly to pleased nine as team leadership As serves we Executive retired at seasoned executive leadership to really and Board our forward and working a relevant who thrilled him. Nigel diverse Board. prepare we're Board. Travis CEO Nigel for experience. after global Reuben's executive of transition the to [indiscernible] adds previously We to our Chairman Board look our in We're Duncan to add Duncan. recently a roles of also to joined of and years currently Nigel variety has has our experience our brands with served announce from

trends and overall growth outlook by forward. encouraged industry Finally we're going the for current

efforts improve our strengthen to and enable drive industry. in business that We us a also our to market healthy strong, believe will share

represented a the by our We the confidence our we're strategy in substantial taking relentless buying return to are AAP, priorities ahead. to in authorization. improved excess our line Board ability the our from execution In portion stock. coupled an to focused of and In we're capitalize objectives on step another With and shareholders far confident approved performance direction across cash for remain in strategic while million our opportunity our share summary opportunity $XXX our new of our satisfied. a the future has with have enterprise QX with important financial the on we right repurchase the back

will and his Jeff I thorough on his tremendous take next this and After XX President level for not I of search, promotion congratulate the talented, I'll that turn With months. Chief him the role announce turn critical playing over and a to Jeff respected lead role an it Officer. I objectives, understanding to to deep during clearly the Advance background, highly Before the excited a Executive few while to partner been and is strategic me past he's to to of highly an months emerged person in since past over team considerable take impressive the Financial could in Shepherd done to it building job our cohesive want more he finance him Jeff. be Jeff completion potential. thank our finance a Vice for brings play throughout thought over right opportunity Advance. a Jeff a He's global joined. appointment unlocking excellent as the to

Jeffrey Shepherd

everyone. opportunities the Thanks working of am I time I thank transformation. the morning want during ahead leaders Advance honored together team such and to continue team grateful for entire as in such this opportunity part Advance. for Board the we company's and exciting their an to Tom, cast impressive the fully support to for good vast of and be an

reduced I I our success. was they prior the margin from congratulate thank financial the of delivering chain adjusted supply every X.X% year by In hard slightly our and profit enable On XX.X% to want gross billion, prior the of Before rate planned adjusted points. on second was profit and of for expand members down quarter quarter quarter unplanned to increase gross our work of quarter. our due team which performance $X our them both the our to expenses improved compared for basis a day year margin a total gross an do results all strong basis XX in to primarily

related previously, to fuel versus lines year inflation these two that centers distribution forecasted the the rising As and exceeded quarter. cost we've opened the base costs the were raised in expenses prior last our cost Separately in for our quarter transportation new indicated year.

this focused line top and in we as new efficiencies the there results on significant than improve while is fulfillment ensuring times cross operational are banner this At we visibility opportunities optimized model. a to Additionally at part manner timely with a from received positive seen we're inefficient delivery. have still stage in results less demand fulfill

expect of improve is not percentage our will banner as supply to structure growth While net we over continue we the and to chain cost optimized improved cross sales know cost efficiency leverage visibility deliver through we transformation. time drive to as a

unfavorable. increased Finally was mix sales overall product despite the our

addition in from benefited line outperformance engine and top under Our strengthened HVAC chemicals. cars to cooling management in and

performance. last prior the much balance to of improvements labor corporate was year's related as benefits margin insurance However focus expenses heightened in were be these to gross costs, safety XX offset to material and of were we inventory were these improvements organization. second sales point by percentage contraction throughout XX.X%. adjusted contributed XX incentive margin year the as factors the year. lower savings and continue basis points The the due carry These partially in million teams was of of by by our gross SG&A for Overall will These by in lower year-over-year. increase a on $XXX combination basis for bonus and This the a offset field last to quarter. effective. an These headwinds in increase million compensation expenses, the our Adjusted quarter, rate. of compared $XX SG&A a partially headwind in an driven the net to as improved year

this Of income an adjusted as is talent second operating and we regard a to million X% performance improvement $XXX versus expect we investment achieve goals. of year. raise delivered bar In course the important quarter, to also adjusted our the an in income succeed operating on and prior their and the people

to AP while have repositioning throughout of we're our the to say we managing said the short-term free $XXX adjusted a and points we successfully more of our cash to Our operating remain approach steadfast same We million to our of our cash We cash terms delivering to million us negatively will inventory on that for in line management and of increased take in Through committed half compared will confident customer that With throughout was $XXX to cash six balance network million $XXX our the reduced nearly X.X% capital yes inventory customer impact Because XXXX. our during AP the XX%. proposition actions our often increased value quarter. with to our margin to deliver priorities. to first disciplined $XXX XX allocation XXXX period customers. committed inventory focus on in basis and operating remain steady and will beyond. quarters the In flow progress and ratio enable turns. improving payment our we ratio this and XXXX to increase million increased improvement and not remain year-over-year consecutive flow we the

are inventory We regarding of continue thoughtful year. the over the being our growing to on the while we enterprise several plan focus improving next our across years optimizing balance for assortment now and given inventory the are we the

the Moving openings CAPEX projects. the and related timing in to as certain largest the decreased the of fewer year. investments million as in $XX quarter to million projects capital due chain our IT investments, to supply prior our spend store In quarter to to $XX well were

$X.X to continued competitive factors our billion further seeing XXXX are a clearly results closing $X.X poised we make to sales increasing transformation beginning in we progress to $X.X and Based to on in pleased expectations a net effect. performance billion. sales improve from and our comparable new of take earlier and while from we're of the with said store are Tom benefits increasing XXXX actions sales to range our to of improvements believe the year share range the are gap. market along these full first outlook net industry billion our growth underlying billion half $X.X As update guidance fundamentals We

to flat up expected to now from comparable be to sales also store increasing is and X.X%. down Our guidance X% is flat

and of it improve know in the to significant back certain a overall however, fuel the from positive the expansion. This monitoring X.X% the better of much in on operating we yield having to includes currently opportunities optimization our originally margin it through. the way with enable low our and headwinds impact Compare adjusted income banner than addition half flow effort benefit we're the to half is inflation we're cross we pleased impact XXXX. have however, Further will in line, higher raising cost. this unlikely X.X%. which guidance visibility will In year of end is are top This margin back efficiency transportation margin underway, and is planned

ahead working entire number reviewing in margin cost growth. to start are required prudent our timing locations therefore income the half and there Depending to our and year potential investments Worldpac Worldpac we our remain new provided and successful we're XXXX. the to plans minimize end Professional been looking potential impacts for year added the margin headwinds, range maintaining top of for X.X%. will see we expectations to is open are potential we number current second these Year-to-date with benefit increase Finally it of the and line up are driving branches network adjusted in open. the cost feel These the branches. openings of to high have the in on associated best will however diligently at our But previously operating very

authorization are Additionally business to and and new XXXX. approved end an business overall in This Board million share priorities liquidity is with million investing our repurchases targeting the our to our In ability replaces in $XXX rating share financial the than stronger we're and our place of it's $XXX in the in put we line Last $XXX much investment maintaining to repurchase in years. generate XXXX. authorization. million pleased from grade a week cash with our been

higher expectations every of well of expenditure as a project are two as our of to year to this last projects level of on timing year. we $XXX million certain $XXX capital million to range items full the capital to decreasing a Turning our due combination guidance, scrutiny updated outlook in

the year. XXXX, $XXX we're we of half the improvement are $XXX a cash a our with to open your We're in of free that the of With low end XXXX as by place, we flow of beyond. have addressing pleased million first we questions. the increasing taken confident terms will In million minimum and continued result enable in let's have discipline the outlook put for for to full up growth actions it strategic Operator. the

Operator

Chris question J.P. And Morgan. first [Operator Horvers from Instructions]. you. comes Thank our from

Your line open. is

Christopher Horvers

congratulations hiring good Thanks, the guys and morning for Jeff of Reuben. and

and in So quarter, performed the DIY first Pro the about how you each other more talk so business versus the trended relative DIY quarter did can questions, they and more, a of to you few sequentially how accelerate talk second the Pro about because accelerate can seasonal shift? did

Thomas R. Greco

Chris. Hey, good morning

about very and particularly to stores, by we're online better, then we're the DIY. so for quarter sequential a First from was Pro. they shift on well QX performed the over the improvement executing actually that course side, the encouraged terrific of to had per of Pro our April absolute performance, talked real in saw on in we close DIY prepared nicely, the is perform the benefit in led first cross as Within we very that and we the actually all, nice May, from DIY terms. In banner the call in piece remarks, the visibility on relatively acceleration some a our about trends we we accelerate. driving of of spoke start to quarter very greater quarter units then continues which And that and saw side store transaction soft a our the helping where course a

each line sequentially speaking, a greater in improvement with but relatively other DIY. in So,

Christopher Horvers

your Understood to how thinking market. then relative you about the and are performance

and about stack trying look of looking instead on performance some we should the clearly a and -- year is mean there get stacks shifts, given there acceleration of think the mentioned just and thought on thinking your in I about because second tough the you're should how half an you it's the one to execution, so industry about first the think business basis? at thinking focus stacks, You at of the these I we quarter two or

Thomas R. Greco

fairness full look QX a think our timing just at even at fairness, Yeah, the of I significant would over half And but probably basis. half. the in course relatively front from versus into I see at look right But I if last XXXX, the see improvement speaking look Chris. probably competitors front year contrast QX XXXX. of year, at to that then the shift you to front want XXXX, you want a you'll nice this half of the we think on the to primary you'll you if relative look that improvement the three a years mean in

Christopher Horvers

question, you the raise the demand comp you talked just I that then essentially and about upside? Understood environment, only first year, the the for improving one as the understand guidance an think raise and comp guidance for half of about but was the clarifying

Thomas R. Greco

obviously continued front summer, our you're been like we and trends an half there making also have benefit industry. an of environment think continue that improved very we think continue I terms performance progress for that demand going this execution to what We but on week. see and in the that I the it's from was are the then is so I to we to stay execution focused through team every going the standpoint seeing. Certainly, field see warm reflected, to driving we're from to positive improved half back was so in like really

that by encouraged well. reflected partly as that's we're So and

Christopher Horvers

of luck. Thanks, best

Thomas R. Greco

Thank you.

Operator

you comes and from Goldman Fassler Thank our Sachs. Matt next from question

Your line is open.

Matthew Fassler

would of good as you and helpful morning. much really think It initiatives from impact so had. to your get to sense to self-help Thanks the a some try be you

expectations, and the business to terrific? improved be they're banner would contributing it on the spoke analytics relative availability, but impact pinpoint about sense parts spoke you beat a might to cross of the while difficult industry it better how know about that I any the very you You nice got had that initiative, be had

Jeffrey Shepherd

breadth opposed It cross side the on I has gives on there's into visibility XX,XXX as great up businesses, across and Matt, a work that have our view. to helped a we've They Advance on splitting are us. enterprise customers we're banner accordingly. has in think that Bob that all And question the we got the no position that to see customers the parts it out to Pro. ordering the visibility to again Sure assortment have respective that and led their really Professional we narrower Cushing they're

we're improves banner. incremental that clearly curve just is the cross learning some there as that on from So getting getting each benefit keeps better and week

On sure the the the and are side, store units the progress Mike for UPT into UPT, very making Reid field what's week specific conducts driving seeing Aires each transaction, against the we're DIY on our focus Mike with per on how we [ph] organization. we Broderick on call are Maria leaders deep operations leaders are performing to progress initiatives.

So improvement look of XX lot to on still at there visitors one then to but of in that we're There weeks we website. XX UPT. I seeing And it. and a our feel grow is our we're about we up terms Matt good think room online of

growth the visitor was I XX% online up about the thing as through and think we June been able have our been leaders conversion has if in hold you in that most up. out look going retail of we're our traffic traffic been and that good actually over have June amongst in on rate all to our that at is been reports recent the

some are think doing as that I we're helping of So well. things the online

industry and are so. a disproportionately our doing us within So just but the all I standpoint helping big drivers internal execution the that not role think by those boats played in are an rising they the from with

Matthew Fassler

about this of headwind it associated Just Jeff probably the net is expect sounds a over that, initiative margin on year cross with perhaps better year? to banner, like impact talked and for those rest offsets quick any that size some despite modest the economic the from you'd sales, margin way the up impact margin, follow the sales the

Jeffrey Shepherd

changes Yeah, customers we we what's structure. banner the impact to of our you we which wholesale happening a fulfillment to platform make be mean for is think our strengthened sure make wanted about and engagement when knew what was Matt there professional to we going really before started I to that launch cross

we now we so belt, assortment got under there are sense that need disproportionately to of get And couple are our products to a we're we've what changes improving, months starting for the are how a of of inside those making Worldpac factors end of all those branches, or look considered as being be do connect at our the market stores balance are nodes, year. we Advance

have couple with belt our of nodes. under focused end a now a more very months we on So market coordinated effort much we're our and

hub about lot routes we you think delivery leading our about operate network So and Worldpac. the you when a have that hubs happening the the distribution that to connect stores we possible. centers, ultimately that and Bob's how it we that its a the moment into the way with with but at What's now and work and do Leslie make most of more doing the routed think efficient us Reuben sure optimize through coming really in new demand we're

on impact underway. half. it have huge the back to is expect a work that don't I So just

Matthew Fassler

Okay, much. so you thank

Operator

you. Thank

comes question Bank. from Deutsche Mike next Our from Baker

open. Your line is

Michael Baker

couple of a Thanks, questions.

midpoint expecting point at about the the stack, half why comparison in guys then back look just the front on the half comp you and the using versus the front we half? looks so basis an have do half comps, like easier year it versus a similar you're expect of two back you wouldn't the First guidance yet acceleration XXX

Thomas R. Greco

Hey, morning good Mike.

I think of of time matter a the we're fact thinking just the into still a got is there We as also and in QX quarter. left early lot QX.

out don’t of just ahead want get we ourselves. to So,

progress I think like we really making. we're the

to, can want had as that that's the are You're accountable to the and so look our thoughtful just all we key this a really difficult we We QX on are make deliver right metrics sure are we that we level we we at absolutely cost last year. engineering that I a point. think structure to

Michael Baker

to and specifically incentive one, your ahead thoughts, is comp on of your just helpful, in from more, reasons or out why you some you couple a sales mention is that's one there, margins increase read didn't the you bonuses increase, margin of pass Okay, precluding what end raising that factor be potential high about talked so to through I And secondly that's margins, wouldn’t able cost then margin a negative inflation would being seeing, think of hit? your guidance? space is historically increases why why the that the be margin a you you

Jeffrey Shepherd

that me Well, let sense let for of and a me Mike. bit give try you

we be First I quarter, was all factor did a bonus of mention it in a year. a full bonuses as mean factor. will the factor the

give the a So, about full I'll for and how you year. thinking sense are we try

in out back Some of in remarks limit will these items margin we QX expansion and that impacted the called they prepared the our half.

seeing I where excess and yet which We our costs the which plans. selling supply visibility mix prepared are little just lower inflation biggest of the banner we are a of product cross not one in delivery within are rate. is transportation certain more about we're talked in products bit optimized. about that our chain So margin a in where gross remarks talked source carry costs

if you of little a see our of we attention about think impacting items both is QX those There year bit your the forecast. these So and forward of I to within that we two are draw balance into do SG&A. carried of balance factors -- year other have that

build in to build campaign company back in more excited want time First in that since but We're loyalty. behind Very for positive loyalty, a in we this September drive brand, had very to half effective and campaign. expect long in ROI that to customer be full about our it's be us, that. exciting traffic we off, the advertising and a to will and on new marketing really been drive advertising we we've investing customer advertising it'll come we're be this new kicking in the traffic flight and

both we start costs opening the There exit prior branches the year. are XXXX of associated and with more in with investments, these think startup enable the are will But momentum. marketing are us the Worldpac half. we Secondly to back branches that this short-term Worldpac above XXXX and

So diligent are stay that side. momentum into those to we we'll half and and excited into cost on top of we and have momentum continue the went we're line that that things about XXXX course the back want guidance the the

Michael Baker

still expectation? follow-up sense. That I be margins a if quarter is that said the gross would makes ago One to guidance, within up you could, that your all

Jeffrey Shepherd

to up, margins be do yes. we year the for gross the Yeah, expect

Michael Baker

it. Thank appreciate you,

Operator

Thank you.

comes Our Michael next Lasser question UBS. from from

Your line is open.

Michael Lasser

my their a taking thanks roles. Jeff congratulations and lot on and Reuben new morning, Good question for

to of from you expect quarter reasonable One Tom, work saw that bit been to all and same long time. at little gross together run think the the the getting again you of Advance do a leverage the the get Auto model it's Parts time? can margin, this We margins sales when over elusive sales at factors the the that work together SG&A same has

Thomas R. Greco

Michael. Yeah, comment. for good Thanks morning the

balancing we're levers that think thoughtfully. I those very

our draft than updating our with of are recently. the deeply plan, opportunities. and I understand would structural middle opportunities very of ever as a I what the margin we're from on on our describe We year Board in clear differential between addressable we of peers. margin strategic And And that that say shared we would more ourselves our Directors actually of the line five

gap of you is if year-end you and of that XXXX somewhere and primary XX% in we that margin So contrast our to consider absolute our X.X% XX% addressable. between fact competitors believe margin of

doing sitting we expansion opportunities that industry with my we're now, X% share in here the growth what of and need leadership is team share with about opportunity the to really addressable order we are a balance opportunity growth believe we margin the market we choices make to tuning because big fine have share. what I also So

year do our and shareholder value free expansion here we're is on we a this approaching And it. drive through we're you continue how on directly. a over of in all balance It's between levers five how to believe going you drive SCF think top [ph] increase from and margin it in how plan on see should a do margins, So drive combination year flow sustainable. throughout growth We improvement. and progress focused to I line question answer your that line, plan, top you consistent and of way to our share those can really cash a that five that's performance, doing do improve stay

Michael Lasser

second quarter your measure and what organization question follow or last it environment more you have control on your how improvement because idiosyncratic was favorable quarter than within you was clearly over you particularly industry first the from the my Thank us the to results? catch of quarter that much this up weather is you levered can give what you in think the some more your second so up to quarter are the contributed quarter to, you sense region

Thomas R. Greco

think the that are input I a even or units talk that happened earlier that market look at. at same metrics in overall. but time. But as difficult look about transaction of per infernal that at we that whether second are mentioned question industry say obviously metrics online we Yes, share to that DIY competitiveness we quarter And is visitors or our have some it there's benefit the we're Michael improving an is that the we all those on progress seeing the key

So, our disproportionate I some there that think that execution say driving improvement. are is would things

Michael Lasser

year. second Great, the Thanks. good of with the luck half

Thomas R. Greco

Thank you.

Operator

and from Jordan question our Bret comes you from Jefferies. Thank next

Your line open. is

Bret Jordan

guys. good morning Hey,

Thomas R. Greco

Good morning Bret.

Bret Jordan

like first? you A talked hundred will guess rating repurchase share implementing down is million spend question It on bet leverage the and I you I the they without still the X.X to ratio, X.X program. have to times sounds couple let a agencies getting a

Jeffrey Shepherd

Yeah, frequently sure we to generate do and I'm we publishing speak they'll at the up really of for Bret. cash cash I'm be something. them sustained in we're our balance going our to where with talk ability continue vacancies but but on comfortable to feel not basis a terms with rating

to We that So business. cash the very want maintaining which all is us. grade important we with in-line of factored said our investment to reinvest we've priorities to in before kind in, and that invest as continue rating

sufficient we've feel we cash, got start half in can got cash, CAPEX we've be back were going investments of taking that And shareholders. that have having feel place all like we the said You returning the right we level can we see like some cash to place. right to that discipline generate got to

the positions that So we with comfortable very feel we're taking.

Bret Jordan

Yeah, and think ratio your year. balance in the that accounts to go you up I of the you expected commented payable

target I extent year? of guess AP there end by the to maybe some a the inventory is So

Jeffrey Shepherd

I to it's go If our And but I through points lap the very place, the trajectory expect move and couple up. to a take old go put those disciplined clear went to Mike we in of would take time. getting and negotiations will that Bret improve needle QX. have vendors those be as the of to new team continue up they time. It and some in expect it going we going initiatives the We to this manner so to terms we think on to I are expect a from And similar be his QX to would first half. terms, top the with we as well. help do a continue to But similar trajectory have want line to as very execution that course to

Bret Jordan

and and Okay, we to consolidation? always where I the ask, have update are IT us can catalog you on question

Thomas R. Greco

to technology be to the there. Broderick, banners. done. for previously. Bob simplify get the with part obviously all plan, a roadmap about that year that or Chief going Officer. about Mike had it our significant he's we He's all talking excited experience very than needs the of construct constituents page five moving He's was we that of the pretty we're of key and Technology done doing got is about three Cushing, working we're to clip our the starts with accelerate banners. that. comfortable the done He feel really get four work closely who of version across We He the what been data Sri of And one that Sure, notes integration our architecture been Donthi with that faster have to across to our months all of Bret, work with systems has work here to is know

is a have be is there difference for and of but timing us. is many road the all coming. Sri make So tested of big Obviously these that of it mapped things to going to

Bret Jordan

for targets for any Okay, when? timing

Thomas R. Greco

against going to not targets have broadly to continue but we're that. that it. communicating absolutely work We We're

Bret Jordan

great. Thank Okay, you.

Operator

Thank you.

from from Morgan Our Gutman Simeon question Stanley. comes

open. line Your is

Simeon Gutman

Thanks, good somewhat I you a a of morning. wanted to Tom up. ask follow

what about the were future to this understand differently three issues margin other supply the quarter issues bigger so this test your is was ultimate given thought, about than does you the margin, year quarter mentioned the strain to longer inform five take quarter? talking came for this identified you and chain the can any the get you you've the better probably performance initially on You you that I plan, does bear think that potential you amount it but because

Thomas R. Greco

nothing that mid teen we Simeon margin can that there's our get mean I has perspective. over believe We to changed time so

how of everybody of us to has again as all are note it. intimately that sequencing better construction this clearer can And things we those got of think team I we get it, it's it year plan understand quickly and understand important the here it. we're into we the there, management now, middle the deeper of I to in think involved that was the right five in now

We the here think first of briefly. around that not time I anymore. it team many been I've a here very with are constructed whom

we this the weeks. of one. but shared over So that levers and last of we that we absolutely had we fall a on We're time. timing think key And with our get the their couple everybody's not can will got over mid-teens it. fingerprints to think draft it, with finalize this We I the completed I know Board believe margin

Bret Jordan

it and going is etc, with time? around sequencing, Street am the Worldpac, the that the I be timing sounds we will it like some you're probably sounds the half it investment matters, sequencing how And shared if back marketing where in learn Street the the curious timing making which I the guess so the expecting of versus of like about prudent over

Thomas R. Greco

done. and key initiatives to Yeah, timing end we and the an will the on update the got by we provide the expect the finalize once we've year plan everything of

Bret Jordan

product up margin. then is on and follow my just Okay,

the chain You inefficiencies I of then the the declining forget if and over or seasonal just ride still from talked some products. anything supply discounts about mix promotion you in shift about mentioned year-over-year?

Thomas R. Greco

there's every ride week year-on-year. over and the DIY I no know. there I Pro feel look both we the major it on as and side it's the it on small at you But side, DIY pretty now learnings have changes no lot and that side mean we think had about much situation, we there of managed the that Yeah, we a managing than differently we're good had

Bret Jordan

Okay, thanks.

Operator

Thank you.

Matt question Barclays. next Our from from comes McClintock

Your open. is line

Matthew McClintock

of the actually have in terms morning fourth put traditional year restructuring this early out just be are tell more to now or in a might or used banner restructuring, thinking long I just and plan we a trying sequencing, of to restructuring not more Hi, could us cross of that get sales etc Tom visibility good the take us everyone. thought about it's approach stable inning to clearly larger a in the the company, to out the was new seems what five when early company of of to you the today could platform timing broader maybe inning that on stages it company, could you in fifth of company for that wondering today broader the stages a you remember of of if the but we the you and be of and terms the it you importantly within shared is purpose or different am still sense thoughts team inning wasn't update used early us executing yes, you're your a you efficiencies ago of thanks? more in a get of starting a say plan now where caution actually joined, and with broader very into maybe I place I a

Thomas R. Greco

Matt. Yeah, question great

that had the first And great a because would in supply of say we in many that the turnaround great that I to lot the a -- the nothing people we bench. didn't how areas. years, We strengthen to that got be brought chain, much of a talents marketing, organization, we for in we I've a way culture. than and in the in my here we had the have go to to spent digital in developed. two new Advance And build there's got find of have time bench past technology, in whether and time all [ph] people I how we learned deal long we think the that had important be in do would really people react of I to time here worked to capabilities outside who that, more need that successful

that get dramatically is I did the better I people culture. the think two in feel of and I the terms ago years So than I answer

are year Now changes regional still field of clear. we the mean as field still respect. I two use We ago. it's we -- President a lot place. to in Vice organization early XX put about example. making put a you're in We that field an I be the in will restructured leaders place,

are now with the chain starting was supply it We organization. part field for they their of dramatic that that change think subsequently store I to organization operations It pretty get stride. paired a a was up the organization.

are say now those think there's we're as our to still very down time. a of way confident those we're to tear I it existed there's an certainly starting innings. much very, much more something do ability now. feel more do here going efficiently. would early to of for cohesive in of So, that I the we still faster out say division believe I to long and us for teams when move -- silos opportunity the unit. I to business a believe as perform more have a

So, is the I everything perfect stretch any by wouldn't say that of imagination.

years We much two do we but than ago. have still a got a lot we're were to better in position

different a were. number So phase put a hard of I to we we're think a on in it but bit than

Matthew McClintock

given with for are initiatives that and Reuben and what's already the if the just maybe or could have any same Thanks your little bit down longer-term one color a from is of it a supply retailer, he here up, different Board of follow message that in place? of has just backgrounds more prioritization a that from is traditional coming changes chain in the more in executing I there

Thomas R. Greco

has been construction there thing Matt agenda. Leslie the intimately great the Reuben in Yeah, is supply of that that with chain involved

very very we're He active actually a me active last been He's he what member been exactly member. over board knows very years. he supportive, board and helpful very for of a couple the was So has doing.

few thing strengthen He years. That deliverable as chain that knows that deeply strong involved. to leadership last built we had has team. supply a Reuben had So very really Leslie with leadership a he's one been for team well. the been really her that. the leadership in was involved team

the going are So, continue. are initiatives key the within chain supply that to

is strong I involved in real was whole background in very he omnichannel think strategy what that brings the fact the in well with omnichannel Reuben Walgreen. of construction

mindset general describe So coming we him management brings to also in. I role. as He would the are excited what about a

I he be of direction faster see to So I will leadership work closely any as in just starts comes the chain. have the here we moving major the supply and we shifts than team. don't think rest with in

Matthew McClintock

luck. Thanks a lot, best of

Thomas R. Greco

Thank you.

Operator

Thank you.

from Greg Nathanson. from Our next question Moffett comes Melich

open. Your line is

Greg Melich

it's questions. positive sort a it have improvement, a been Hi, the and couple like it was of at a One, may helping basket? thanks, I had traffic comp actually of nice sounds you units and time if lot ticket and was the of look or mix in

Thomas R. Greco

and up Pro significant a were was average I'll side the it store again both traffic. split It but was ticket. improvement the in transactions our it Greg, DIY saw and positive On on not a helped positive, we I traffic significant and improvement of then then store our was in I mentioned up roof. by as online mentioned of through course. earlier ticket average was course UPT And the partly earlier traffic our

Greg Melich

improvement DIY a of positive sounds…? was traffic it overall with and lot So the

Thomas R. Greco

them you put together. If

Greg Melich

positive And in was great. quarter? a Okay, significant inflation the

Thomas R. Greco

X%. factor huge a under Greg, Not

Greg Melich

directly imports I your tariffs around, then question am all and from we surprised percentage Got China comps with or it imported China of the had haven’t are floating indirectly? what

Thomas R. Greco

I over Broderick, to will one kick Mike Greg. this

Mike. So,

Michael Broderick

is Greg Broderick, good this morning. Mike

point best out country from manageable. perspective point the But into that along number to down seeing able we're We're suppliers pass find give a in from. it provide really from marketplace. working we've So, don't time to been very everything our to but we that comp is this at this at tariffs with

of not in So it's this really been point at much an issue time.

Greg Melich

the and if bulk would one of on the for missing year teens describing with like I it thanks be something? everything that five that, is plan of you lot, Tom chain, chain last am think sounds that you're supply mid talk one, a or that working to supply it about margin just Thanks about more it getting

Thomas R. Greco

opportunities is us sequencing that is them. chain of it? biggest and couple are there how is it and timing go There's page. are can we variables components, supply of But on a thinking probably balancing share that point question just number a after all we growth after the have, in the we and we're going the that are that's with there And other for at of about that this opportunity three

Greg Melich

That's great, good luck guys.

Operator

Thank Credit you Sigman next and question our comes Seth from from Suisse.

line is Your open.

Seth Sigman

Great, thank you, good morning.

the in on doors, you? consolidation, the you heard did can as in opportunity, you So closed quarter general us learn performance you about many anything new update how you thank the store just have closed maybe

Thomas R. Greco

guys Hey, we're really we how get mean Seth. These about quarter I -- absolutely, on good year-to-date. on Yeah, XX what's happening a the excited morning think the there. is much different at number to it I will me that XX these stores was. it in the -- it -- was it's we're express XX closing Overall just the in quarter. seeing than it's hard discipline

that we didn't we fact literally In terms that we and yesterday went had optimistic retain. were materials very we stuff And retain, quite what in honestly just done some on there could which of this historical some XXXX through in assumptions was the actually a had document. we

got retain. of every very the we how much of we've member for capturing there one those managers, stores, percent on business the then are And how President, on sales. deliverables business is Vice the we what around discipline of those so clear team is one surrounding important. professional piece which Region And on much can there being accountability DIY can closures store measure retain, XX surrounding those retained. dimensions We there's each the is district Now

there's and for best, believe we not what we're numbers just bit can retain. retain thought we're retaining of close up actually and the it's there the in a tracking we of more quite our So we follow hope than could consistently exceeding we and store it on terms

then obviously In were our team much the need in we retain. are And surround I with tougher obligation key members lease the members there's outstanding discussions think the terms team that to retaining landlord. retaining which we of

based all the a those So flow exceeding those we on model variables a of year going store metrics. all into cash decision five closure make and of we're

So, we have there. opportunities still

but close a of call mile got blindly one that. all every guys We've apart in we don't you less stores think of the is mile store a that that I know are lot apart. than

asked is comprehensive make us a And hard model continue multivariate average use minute about margin, We per improve ago sales and at the that to going we're our them can to we Greg store. help a variables to have those one obviously that drive optimizing footprint. decisions of

So store we as the competitors. our optimize and also per can have gap margin with sales that footprint us we with help can drive average that up our we

Seth Sigman

and my highlighted Okay, obviously half the incremental thank great, question and you follow the is the of up headwinds. of a for the outlook just second year, gross you margin couple around

a some mentioned of year buckets material I last I believe, are from gains those can year, and lapping year ago did you start chain supply to you're guys in remind reductions from trade you so as including You you and just also well? a where on also those ago income terms lap as what some have cost of the headwinds us

Thomas R. Greco

some year headwinds Yeah, chain a we ago. did have on supply and

about year diesel we're I as planned gasoline talked in has related think right think think X%, this upwards XX% our now, I about transportation. looking I fuel this. I we We to mentioned at are around is prepared mid-teens. our remarks is is what seeing mean we and really of everybody

are pretty for us. big So those numbers

surged carry us We like great warm that absolute it, also as really of we lower summer some an have that's just a margin factor we about because categories this mix talked set, for rate. the

a that about. talking we're factor also that's So

going So The at continue all at. everything think is put on best to that. we're to we got driving drive come together cost and when where continue we're material to it piece, this to that we you in our going hard thing to improve you've

XX% I to categories now. through about the we're way think the up of

primarily his the come in of you we and inventory team come road just sell As optimization. have I you our and there acquire full regard going date. don't that the we're been been we But as you next move the down inventory, your that doing some that about really are a previously, job they an to be because working to Mike get journey. the benefits more enterprise have material round forward. we then approach initiative said the away, the And to right It's it good think Advance into benefit that thinking to of to it we put across Carquest haven't that in cost the broadening doing suppliers with of Broderick on as are because the then an enterprise system, have

Seth Sigman

so you Thank much.

Operator

you. Thank

from Ciccarelli comes from Capital Scott question next RBC Our Markets.

open. Your line is

Scot Ciccarelli

I X so guys, know it's quickies. after Hi X,

experienced First, on can efforts? can And what you the tell you us specifically margin cross from the then was merchandise margin banner what similarly, gross the quantify front? headwind Thanks specifically you

Thomas R. Greco

get costs system. did insignificant it Yeah, costs out We out I those sure other all get possible. out together can teams as those just banner supply call cross banner got cross mean to we're delivering and product that's not to not our we was question, breaking do we we've It's of Scot. chain and an believe have sorry. efficiently to What number optimize though we're we make your our why that so as of

Scot Ciccarelli

the merchandise us XX broke basis it was XX for last I On that margin or you front, out quarter, points? think

Jeffrey Shepherd

what improvement merchandise A Yeah, to we was and we talked we in saw past about. dynamics the just the quarter the MCO generally there, overall that savings actually see of in last cost. quarter we did the you couple on see would

largely the of go headwind mix offset the and chain more this than mix able in of and supply on than calling previous a more supply of we've were headwinds the in chain product in supply quarter and quarter. that the savings we see is we're by that you dynamic offset and the and quarters that's able of forward to lot that MCO mix which do normally combination sort second product basis. was out the were we that We continue see why see Unfortunately offset Largely so a chain it that. to to the experienced we

Scot Ciccarelli

just that you were been have So, what isolated? if improvement

Jeffrey Shepherd

not were that been like tailwind us. I MCO you in if it to We're breaking have for out but take said just a mix would

Scot Ciccarelli

thanks it, Got guys. okay,

Operator

you. Thank

from Wewer Dan from James. comes question Raymond next Our

open. is Your line

Dan Wewer

we how expenses. gross I year something million goods sold. Thanks, think margin. the a we transformation you're actually there what besides the of many I I goods guess Tom up almost years in running are item these of another and I cost fifth sold what second, expenses? now wanted is think a expect? to more about wider or of transformation year quarters And of ago, expenses of transformation should GPC the type ask that charges for ongoing including we cost lot million acquisition rank of don't then in $X $XX

Jeffrey Shepherd

Yeah, Jeff. this is

transformation, and what consolidation look down. going If have had after cost time. Those significantly the you sort at step ramping of some GPI calling are we're back we

I a $X more are of under second now look. really million think the is we're transformational towards we for enterprise doing the shifting quarter what and

to sure that accounting chain, really of sales And such some more SG&A bigger cost through than a two of we ticket been focuses in sales making really that optimizing the cost place. it's of recognized accounting. to assets we are that the in sure which supply of IT, costs the make optimize with normally quarter. infrastructure, can all those centers fourth question second your we had have associated distribution on in Specific the you the is the dynamic we're bigger those investments assets and closing as impairments some the see of purposes We here those where have for rather So, costs.

centers normally is as impairment accounting. have closing closing we So weren't the one stores. function the to distribution a it of We highlight want if that and that wouldn't just of we

X the you up million why that's So there. see

with continue of In the that through question through assessing us part it a This to range for plan this said inform of plan we're take your million. Tom future. to going year, million the $XXX business of We're our of it's Clearly to $XXX terms of are some to as given and the we're to time in timing, go terms to going is for range that refreshed. transformation have year all to strategic we've it going of is investments of the the make. the as and balance and part year comfortable we're five that strategic going going is what business

Dan Wewer

this quick became unwinding or Antonio distribution center, someday? process then it distribution XX closed in we because San center distribution are Houston of And just you question centers the redundant facility real opened after early the XX the on to maybe from

Thomas R. Greco

was decision Dan DCs the work chain Houston our XX function a entire to when really had did It's made and already done been that. that network that supply open across the looked we of of end-to-end

really terms across of it the and was the looking in latter it how the really question. So XX you is ask

and we so across We are XX a will looking both it need like gradually we're from our through working not disruptive. executed have we our Gallman outcome been are those in we're I doing by seeing so that centers far. and supply those been whole say centers not chain do Mississippi way really And team. the stores system, changes San facilities we Antonio distribution flawlessly and We've other that moving distribution to that's the

really the chain broader supply part strategy. end-to-end of it is So

Dan Wewer

guys. you Okay, great, thank

Operator

next our comes Wedbush from question from you, Securities. Seth Thank Basham

is Your line open.

Seth Basham

good integrator questions and on us delivery I additional be an you mile give those in to expand test spend, and that how might progressing lot you and will some replenishment a that when had last Raleigh, is able Thanks can morning. update around helpful? market

Thomas R. Greco

connectivity trying we are and bus to availability terms broadly of in for think started assortment about yes, and to you the we Sure, a way when out look really execution. availability enterprise and across excited market a strengthen are in we obviously

a of on a of I'll couple with lot So highlight there's assortment, going work things.

stages dynamic his banner using terms tools we're but and in of intelligence and the and enables which Mike cross artificial are talked really we in learning all early assort visibility differently of how also machine to we of First to categories. a us that assortment working use through transition about of team to with couple are that a Seth

a of XXXX both the we be in the and assortment strong real strengthen the I across system. think by position to to quality get the time quarter breadth first of we'll our

solution. So of the that's part

we're is things variables about the execution really we need market market can that's using had customer, our In we improved. they how be using one to it inside connect the to to able customers the to at that then our to terms our things testing sure inventory of And our can the We're get enabling to what's faster technology connectivity key and past. of time has often making the in Advance all those are assets than platforms how of inside is we measurement yes are the pilot. end different of we we delivery look order really the say the all that of so the factors, of us that

rate the So banner them from continue things excited cross right going but it that as to about of to through close we're away we're see we're pilot or sure to we we progress. And that work the most metrics just time out measure that and where to on -- visibility progress the learn not rolling availability such better delivery make on we're making key driving execution. we're

to that. going focus to continue see you're on us So

Seth Basham

as half the beyond would the so those be target? initiatives some prior [indiscernible] was roll out, and of start of first XXXX it Got

Thomas R. Greco

have we that see we are already more where we're Where had have The mean customer just about are but we that a -- catalogue, being visibility risk Professional impact have data go of doing the you're Sun's to need system, rolled we Again lot I that's out. reward Yeah, low it. works something of it kind rolled with may we out. we With that touching things thoughtful are cross banner so new right. be it. that Advance we doing, with success things we validated

enough it. that earlier lift of data this from depends on we what it is and we months a getting the in sure want really kind to good to a validation. make Any tools to kind behind want the current are got specific it the the initiative continue good implement data nine of to we have. assortment We transition is methodology and and clean. Dynamic require that So it we example. that stores we're when that used roll sure make of from We've turns AI but six

it So that we're doing we're sure thoughtfully. making

Seth Basham

traffic of enough Where follow-up you delivery it terms the drivers percentage times performance. the the mix. online question related as of conversion, around DIY of improvement of in them Fair primarily terms and in else? And online total maintaining can there are the pinpoint anything DIY my key promotion, or transportation, we you. is sales in Thank sales assortment, and to

Thomas R. Greco

Sure, sales. open pick I mean online to both the bio-line say [ph] see and that there. We we lot a don’t there I up wide the is on the will for extraordinary in of break component our out the us store. turf opportunity ship DIY of home

the Jashnani think increasing skews go his to to up. we we're more they're going work and customers. that's increase which by where a broadening on the continue were distribution that's In from so team I think significant really now, go XX up has centers and assortment home Yogi been centered able the to to done our is offering capability to ship to about I delivery

our So distribution closer with there to we centers obviously our get get as the are part to quickly. able customers more we

takes the get reducing you're of amount to the time it So to customer.

our experience we've of it's user is the I platforms much cleaned think very, successful better. how our very engagement website have more a up been -- much in terms

social work a to experience and say are think for the lot measure Yogi lot improvement like website going things there's like in also ratios but the measure significantly user enter measure do, associated that a media would I think visitors we we We room there's of and our of things with sentiments still see still that where that but is online we to can based our in I dislike all of there. direction. obviously we on were those and better to

Operator

Thank you Research. Chris from question next and Bottiglieri Wolfe our from comes

Your line open. is

Christopher Bottiglieri

my good questions. Thanks for Hi, morning. taking

give the Tom that there is then be and of will previous mix? and arrived is where think I before reason your disclosed than mix, First XX% us you mix different question can is label private team this I to time that you COGS, today where that think mix every think international on sense a

Thomas R. Greco

all we of when label any private first Sure, look or across the mix enterprise. look at now mix we

a may narrower So, was have I number. view that of you heard what think

previously the Mike a terms in mid-XXs a doing on and guess is lot side, we of I lower it work Mike maybe label had in We And team mix little combining But work our aspirations, so than little Broderick, communicated. about category our management are of bit assortment. we're private his are and in we're our a bit opportunity. is with category. share was of with about really thinking itself pricing, that maybe I'll have MCO What doing talk that with Mike a how each big market the

category So, management work Mike do to you want of little talk are to bit the leading. you

Michael Broderick

Of course, Mike good morning Chris, Broderick.

now right which that the XX%. say just the trying from use we've you that true past path to I the the rationalize really of were we would a about from So Bob's look much of illustration, Worldpac, our different close from It right, is midst disclosed an opportunity labels the private of But still have label you're give Bob our dollars. in at XX's, rationalizing business. we're best an team we and three billion now of AAPCQ to in same we're right at when actually inventory of actually so to number high very with $X.X private get in

our DIY partners of to relevant customers. to that's future. as example for driving in in believe a private brand going we of in which Obviously a going do to that's opportunity years. of have we're who have good that brands still we're the a big we well believe our customers next couple what So professional we just our brands, house, the in label too we're actually the as marketplace But course is a our recognized have for big be

As time. most will take little a of you know this bit of

Christopher Bottiglieri

broadly you is cadence how just maybe thinking about DCs can as and just just of holistically can chain, overlap undergo follow or us some as a to DCs opportunity or the close kind of of give element up a two the have DCs and now, chain you And of supply the operational supply close limitation give some technical there okay. bigger you, you kind how you think this then of will you many into are on numbers consolidating to are helpful? if Got the process more understanding maybe can be you the

Thomas R. Greco

for obviously undertaking it's a mean I us. big Sure,

a do them use you're in we that And not the of is respectively. a You example, that as Nashville to disruptive. have moving stores. case I facility it Gallman, of gradually And to in Houston way had an couple Gallman hundred from and

over just don’t you a flip that, several of is weeks. kind doing It you're switch. So

immediately into a store move date and that customer. case the we getting work -- about DC sure the of situation that were And so work that, tell in that's stores moved. been itself, a that way and prior We've a Gallman it's the the team, that we in from to the ran that in -- you worked. to team to our stores Gallman thoughtful do make does it invisible closure rates basically that So way a been how saw with they were we field where leads the has we slowed the I seamlessly that have close some merchandising below very we Nashville and down to year replenishment the can being to or Houston closely it team the team, operations do case

and a in is you're So invisible the to it possible customers going that stores. visible way to as to do the

So it's process. thoughtful a very

is on so the a of a you're cadence to switch In can only this, a and in terms year. gradual take going migration. you overall on organization management segment change at of where time very I've focused you've that act. it the the done previous and there's becomes bottom life is on a certain right got one in not it a flip that change We're many

at all of it sort do can't once You thing.

you we I half on the probably there about think long-term. year doing that's a many how think is how in and you the are should front a limit do. probably this can So of Obviously couple

Christopher Bottiglieri

you. thank helpful, That's

Operator

Thank our comes you Stephens. Bienvenu and next from question from Ben

Your line is open.

Ben Bienvenu

of relates sense organization, doing about wanted more I ability in about good then talent is is I it curious it to business, And on about the about a your to ability maybe to communicating thanks, to to talent, talked the am store as to Hi, ability relates you your side you're maybe as it broadly? you retain retain your labor that ask talent going where hear attract consolidation, your to attract of that, the higher of it talent, how the to just stand us pay turnaround narrative give front? morning.

Thomas R. Greco

with retention interaction talked is so the now. in right Ben only as our to our We're our as terms about we in store success. past Sure, good customer a of which in organization important a have frontline

it four on have account stores, on the we big garages, those out dropped So us district and -- the but our down, now down to it of the that the call Pros be of that four flat kind we are and year at like were to the managers in is kind there and been had field, down, rates. our those it parts is years significantly lower commercial managers this We It turnover was holding jobs two general where our counter, basically professional our turnover of would year-on-year. well year our managers customer has flat. prior so ago going versus jobs are important we

stock we in for us frontline pretty feel helps groups earned to continue had our awards and our have have on that focus it. stock front line a at about ownership program we to Advance we retain good have and where going a are we've So that significant We that thousands literally that that do those of associates certainly talent. leaders

In it build for then to those Both here of bench gaps. a and tell the company. worked very people their organization develop a amount and interviewing fill significant through every spend have time quarter to terms roles those strengthen while we you our have that and we the in And as of who are of going a me, lot leadership team drive team we we attracting value important is, to time. function a big long the that leadership gaps accountable time are here. team inside don't care I of the they I mean what people got I spent leadership

are on have a Raleigh, than and at been opportunity companies to if actually the we've -- place you're the and country talking say spend be wouldn't technology is here you approach proposition depending really will low so say terrific and to here talent. in transformation is has your about opportunity I our when North It's do substantially attract proposition here I continue talents to think larger talent We time mean our in But, time be great think for the So of is employees a that's base, that this triangle. Sri I brand come you is really we're here Carolina is research the anchoring that many is point, we'll would focused what that. the it we're larger. extremely that same growth you and Yogi rates you robust very have competitive the unemployment I brand very a technology can we're across is substantially upside on there to there. -- overall on lot The on. a what to understand tremendous holistic people compensation. talent

Ben Bienvenu

detail, luck. Thanks the for best of

Operator

Tom over Thank you for Greco like remarks. the showing and the I'd I any back to turn queue. now am closing questions no conference in further to

Thomas R. Greco

all in you. successful forward discussing talented the transformation have in to and of team and thank fully their to confident our count on moving day support independent relentless we across in absolutely for be value partners once in each forward place, every capitalize to quarter the robust drive delivering our shareholders. we ahead AAP. morning. our this we your very And and again the members of on us We Thank you to will opportunities like progress third can the you to with Well, everybody look to and team appreciate our call dedication I'd call Advance I'm thanks continued on November. improvement on

Operator

conference. wonderful may for you disconnect. gentlemen and participating the Ladies program have and you today's in thank day. all conclude Everyone a This does

Elisabeth Eisleben	Former Director of IR
Thomas R. Greco	President and CEO
Jeffrey Shepherd	Senior VP, CFO, Corporate Controller & CAO
Michael Broderick	EVP of Merchandising & Operations Support
Robert B. Cushing	EVP of Professional
Christopher Horvers	JP Morgan Chase & Co
Matthew Fassler	Goldman Sachs
Michael Baker	Deutsche Bank
Michael Lasser	UBS Investment Bank
Bret Jordan	Jefferies
Simeon Gutman	Morgan Stanley
Matthew McClintock	Barclays Bank
Greg Melich	Moffett Nathanson
Seth Sigman	Credit Suisse
Scot Ciccarelli	RBC Capital Markets
Dan Wewer	Raymond James & Associates
Seth Basham	Wedbush Securities Inc.
Christopher Bottiglieri	Wolfe Research
Benjamin Bienvenu	Stephens Inc.

Advance Auto Parts (AAP) 14 Aug 182018 Q2 Earnings call transcript