AAP - Earnings call transcript Q3 2018 | Advance Auto Parts, Inc.

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Operator

Welcome to the Advance Auto Parts Third 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 discussed on this call.

Elisabeth Eisleben

Good morning, and thank you for joining us to discuss our third quarter 2018 results. I’m joined by Tom Greco, our President and Chief Executive Officer; Jeff Shepherd, our Executive Vice President, Chief Financial Officer, Controller and Chief Accounting 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.

be as our Securities defined Act XXXX. please include today Litigation begin, of statements forward-looking by we advised comments that may Reform Before the Private

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

non-GAAP results financial detail Please these helps management the certain We the consistent in reconciliations Additionally, call. believe most statements. more release regarding release to measures the The our and include statements financial refer will comments how and non-GAAP these by related measures. information investors call press GAAP quarterly this measures complete and be additional providing measures today in of comparable results. forward-looking governed content contained with our our today views understanding referenced and accompanying a to today’s earnings issued financial gain for financial of our our financial is statements of

Now, Tom let call Greco. turn me to the over

Tom Greco

good morning. and Elizabeth, Thanks,

meaningful on execution, us X.X%. comparable for business valued our quarter, team are customer by up and It’s increased deliver First, the that thank to led in customers. the in net Carquest entire the more our comp that It’s were because turn performance. in with X.X% quarter, to transformation which $X.X actions enabling progress driving metric. marketplace we to growth hold, In able sales strongest and strong our I’d focus to to beginning network billion clear earn dedication by nearly our third of improved Advance and Independent share unrelenting market sales to take on virtually years, improvements like financial were a characterized and sales every eight their of

compared cash organization. our points of year-over-year, increased disciplined year the And XX practices million, margin Year-to-date, X.X% increase $XXX quarter. as per income was of operating to adjusted our continue free the adjusted flow increased management throughout million basis cash we $X.XX. to drive Our share to $XXX an earnings prior XX.X%

quarter did comparable sales and the the of growth XXXX, only Our team, Not average, belief testament the and quarter in the above ticket by transaction Yes! units hard driven we living a strongest on growth Passion Passion absolute value. our is work was our since to truly our for per increased deliver in industry for the sales executing entire our mission, performance Customers, average cultural

Importantly, our strengthened omni-channel we saw customer throughout balanced, we From DIY and improvement XX delivered and businesses. our regions. QX a growth geographic professional value in all both perspective, consistent across proposition

which the From across saw is teams, regions in batteries, Northeast, Our field better Mid-Atlantic Southeast, way. our also increased category with a Midwest, and we across Appalachia, we to and operations perspective, coordination where led nearly our high we’re seeing momentum. Without marketing sales doubt, single-digit strongest every brakes, contributing delivered optics, growth. growth category and merchandising, and planning a the

helping improvements improved time. right have analytical our at locations, and opportunity, we This we the is supplier work-in-progress the in execution. so leveraging still capabilities we made and inventory, far we’re right improved ensure but Finally, right the the that believe partnerships a have to significant are

and Independent every Professional, Advance, performance stores. saw we banner little including across and importantly the both AAP Carquest improved a deeper U.S., Corporate Autopart in International Going Worldpac, in

they online customers to an customers, as an expert featuring such the tools ensure and driving well business we thanks our These interactive, training have of customers and visibility, best-in-class our choices, we’re customer one of our cross-banner combined leaders. easy into access options online want proposition we’ve from assortment desire where This job and better is place, value can our much needs and platform mobile doing services capabilities aftermarket from rich our shop automotive launched customers industry on to direct leading focus advice solutions as ordering multiple assortment industry-leading feedback shop cross-banner initiatives a and corner content use, their are customers. On platform. as growth of for the to including AAP’s incremental friendly professional pro meet Advance to myadvance.com, myadvance.com. industry Through continued professional Our recently business. leveraging solution Professional brands Pro

increases and campaign, We’re Think omni-channel quarter saw in great business. QX, online, and equally sales our Ahead. retail in off growth with the In we about marking advertising launched DIY growth Advance, a consecutive Think both. start. to our DIY it’s DIY excited new both We within the second

to page including reduced invest times we continue enhancements where improved e-commerce, experience, We load our additional to website the in made personalization modules. customer and

our buy on In progress to capabilities. online revenue pickup in our we’ve addition, in well made are, today, strong store, Overall, investments orders QX. drove our of majority home ship the double-digit online growth

is the delighted pleased strength, store team’s our with in focused I improving on we to ability organization. through hours increased sales remain the driving additional While third again, service controlling was execution are our we customer once that topline quarter. leverage expenses across

critical as focus in a seeing has culture Advance. become noticeable throughout we’re addition, a In safety shift

reduction a quarter initiatives. safety claims Importantly, the enabled and expect in we of initiatives further progress and on in vehicle our a as benefits safety to result liability our see

did members a recent hurricanes. paid in with developing attention have throughout culture and off safety quickly investment we’re area customers this critical confident on team the Unfortunately, team and by member Our I’m heightened true affected safety has Advance. we

true for the showing spirit their up members are step remain they them standing to ready together cleaning entire working example organization and as their the and giving by team as committed their of We willingness to and damage. thankful team, after our work to financially, communities. thoughts towards I’m up while with one help Advance. personally fellow Our time leading and

expense the our to expectations to confident we’re ability As headwinds. and our on year, the offset Jeff balance focused you’ll on hear remain We QX. from momentum financial into of cost for maintain in updated performance control laser

customers, help our quarter, team partnership As versus line last group objectives growth. a best-in-class will and month much last obviously, for customers a to long-term broader we for year, we’re higher our to QX announced an and visitors reach with million exciting performing Walmart. enable partnership In to market with XXX this building up year. prior us our experience omni-channel DIY discussed last share much every of our SG&A and strategic drive unique better than impact month, With walmart.com bonus will

in begin XXXX, to of We’re and offering DIY extensive thrilled this the offer when be to able our trusted we’ll increased advice half the an rollout first of partnership customers. number of product with

efforts in centers I’m team’s progress also by the our and We pleased with and for supply end-to-end San on made year-end. year Antonio execution Gallman QX. our chain on we’re distribution throughout our closing track

the our first announced year-to-date, footprint we we DC half addition, in XX Consistent consolidated chain supply remain a of Carolina, stores. South XXXX. we In and focused of which close in with and we’ve Columbia, optimization, on closure store third closed efforts, the expect to our

retention. closings significant improvements and very We’re seeing as key business result, we’re approaching and in employee year, differently a this store

years meaningfully to recruit results I’m past to review prior highlight ensure remain and to Health of we’re pleased the [ph] providing the compensation safety our turnover and best and addition within We at positive training our two also Advance. a improvements years. XXXX the positive of discussed with initiatives. committed best-in-class HART reduced to related growth Advance, in in notable able we’re focused while In our the earlier the improvements recent We’ve talent continue trends seeing to and competitive I development to team versus HR packages retain

the QX years provide we’ll Notably, strategic are operating the we continued is our for business plan This number and we’re declines, while consecutive enable vehicles will grow than industry, update, indicators remain the of of by of when results, nearing the of momentum. annual for group we our completion vehicles see in largest Finally, XXXX. this demand XXXX to one confident XXXX. plan expected and seven after the in years of we old three industry is macro time guidance encouraged greater and first since drivers report XXXX longer-term

the years roughly of seven vehicle to GDP expect on and growth forecasted for expected growth vehicles driven X.X% will to with years be Federal older we the the in outlook, in forecast five XX% aftermarket this higher number and today. show be Back we’re XXXX, XXXX. XXXX based XXXX it in automotive total fact, In miles in population continued X.X% the potential up and be is growth next Administration’s up excited than about Highway to

turn outlook XXXX you it forward performance on the to in market improve in remainder our for share With Importantly, to that, of February. performance I’ll confident sharing and we’re for also to Jeff ability the with financial expectations our details performance. We over look year. our

Jeff Shepherd

I’m XX the prior purchasing our building localized several our was rate approach points far we the margin over increase inventory gross further quarter. by which year pleased certain been basis, inventory. despite level, and report Thanks, quarter, improvement in On addition which looked inventory having Drivers the in in basis Historically, Advance efforts capabilities Tom, in include at while and inventory profit we’ve quarter. to that to good our disciplined inventory mix morning benefits at ensure of in this to improvement product the $X a adjusted an in led improved third from more from to of sourcing network our X.X% quarter, execution billion, to year our third of success. on enabled our the success network. of prior XX.X% In the on-hand profit future adjusted utilizing parts a This year gross past across from the quarters. elsewhere everyone. our

we positively prior unplanned our these margin by with cost basis gross optimization Consistent offset margin continued both and margin from points. were planned quarters, efforts, chain saw expenses, addition, reduced benefits in which which material impacted XX partially supply cost QX. benefits by In gross

distribution our last As in two margin. centers quarter cost raised base versus negatively year the expected, prior impacted and our opened that new the year

quarter see Additionally, cost forecasted. the we than third transportation was of XXXX fuel and and originally inflation continue higher what to

tariffs, two gone into terms minimal related seen first impact we’ve In of to that rounds effect. the have

where supplier possible. been increases We our price. increases diligent through we’ve effort to able actions, mitigate cost successful pass through to our remain Importantly, working cost with partners in

industry in pricing our cost We’re pricing with trends, increases pass other or confident future that along continue to tariffs actions. line inflationary through will historical

increase our SG&A an million to was in year-over-year. adjusted third the $XXX SG&A, quarter, of $XX million Moving

increased XX.X%. per percentage higher claim, in bonus, last adjusted of quarter as as which discussed to was margin SG&A due This of we expenses a dollars XX by the and average As primarily points our basis quarter. negatively net a increased third sales, medical to our higher result impacted

in the headwinds. Overall SG&A offsetting our hours as service mentioned, adjusted basis XX customer Tom stores, some percentage As negatively impacted by we of leverage a points. labor-related expenses labor-related sales net

We our field customer and part, get reduce these utilizing cross-banner pleased end fourth significant results for delivery expect are more compensation market important Separately, incentive opportunities the place, short-term and corporate visibility, time. our we was far right to last in while this the the for to much from the ensure right quarter It’s lower right have the sales. bonus the additional mile teams capability continue the to to at costs headwind will both we’re the last as and year. topline we through with satisfy

As excess costs. plans to streamline these initiatives to we remove we forward, have move

the We insurance impacted timely were we offset optimize while on work time. However, continue ensuring in mile our over basis SG&A expenses, remain to of by points this in throughout improved XX and QX. our a to lower focused are partially focus by a on costs delivery manner, Advance. negatively percentage sales we which safety headwinds last parts as SG&A delivered

delivered Regarding year. adjusted the XX.X% adjusted prior improvement a of income, million income versus $XXX operating we quarter, the in operating

flow points our the areas. doubled Our of flow payment quarter. our and date to flow cash X.X% first growth steadfast focus basis XXXX, to than to progress $XXX million in the XX% our free same confident the adjusted to cash deliver compared of million on and quarter. operating allocation operating I’m increased period on three million $XXX priorities. third our in and We capital to remain approach ratio margin in increased in XXXX. more our quarters increased with and to Through we cash our delivering managing cash continued $XXX pleased XX the over these AP will terms, Through

to the in focus us With progress across next inventory inventory and significant made have continue and turns. we we throughout reposition assortment earlier, discussed over I network increase efforts As our improving on the years, to inventory that said, the inventory say that enterprise. to customer our the and is our while optimizing yes often, more several ability helping our

to inventory the the without discussed slightly we higher year environment on quarter, customer, disrupting optimize working demand with and year-over-year end the basis. we As inventory last a given will expect existing increased

investments, invest prior largest year. increased projects capital spend $X and In in supply to In to the compared the to million branches. to CapEx line quarter, $XX Moving our capital share related our for were quarter million our investment Worldpac IT, repurchases second new with the chain, shareholders, rating, priorities $XXX maintain XXXX. the expectation half returning an $XXX our in business, to announced to to return through financial shareholders we grade the in of million previously and million our

Advance stock. to quarter, third we the During were able $XXX worth million repurchase of

throughout enterprise. improvement pleased said earlier, continued the we’re operational Tom improvements As industry and in with the demand

market deliver first on results toward to year, we’re in the update of the XXXX We quarters are expectations. three full performance year actions the that improve closing current expectation trends necessary gap. competitive guidance and balance share Based progress we’re the our and of our taking continue to confident pleased meaningful the through our

billion billion. to We’re outlook of net range increasing our a $X.X $X.X $X.XX to from to range new billion billion of a $X.X sales

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

of raising income adjusted our low addition, end points XX In to margin the X.X%. by we’re basis operating

of remain remain margin margin year previously planned our cost at to our we in unplanned terms rate. provided maintaining disciplined for also and While OI in high approach our income we Therefore, our the it’s of offset X.X%. best in expectations the we’re feel to operating adjusted prudent end headwinds, range

the branches longer-term provided fourth driving around continued QX unlock process, timing to end our to in in enables we’re growth invest As the discipline we CapEx us said and of Worldpac margin half in coupled spending in our and the earnings sales Due call, adjustments information capital our technology, our expectations expect previously to back expansion. lower year in expenditure incremental quarter range. the we with toward full e-commerce

$XXX $XXX year Advance free In addressing increasing the minimum first terms a of and the to With fourth of outlook a your enable the million cash as a XXXX, the range of of million result, from our improvement flow, $XXX quarters pleased for we’re full with to in quarter further pleased focus open and we’re three we seen I’m growth confident strength I’m let’s and discipline have across questions, the beyond. million. that, with this to operator? will year in up and the

Operator

from Lasser [Operator question you. come Thank of UBS. line Instructions] And first Michael with will our the

line open. Your is

Michael Lasser

quarter a Good that’s that’s the comp some and upside are to fourth that up? for expect that are. we the of year – morning. Thanks the some can forecast just how incentive unfold reinvesting fourth next quarter are my a Is from lot margins Jeff the sizable a it you are just they margins here consensus sales your us mentioned margins question. when for and – why investments? in provides you. to and of shape due where implied well not just, also the taking see to So the implies for take because Thank step on return as those of going

Tom Greco

good Hey, morning, Michael.

all, fourth of of is margin are upside factors going First to there limit the quarter. couple in that the a

cross-banner than higher fuel visibility planned of of cross-banner with we’ll couple transportation. think causing those some costs one also these, optimize is – and Eventually those. got We’ve the first incremental which inflation I the most visibility. is is are talked about a but we’ve in associated which

to in the with expansion line growth and we’re e-commerce. marketing drive mentioned previously, investments communicated and what finally, in real and long-term we’re investing much compensation. some making incentive the very You we quarter margin And in then

investing We fulfillment know, you in driving launched we we’re Advance. in off in quarter; start. to and want there a campaign a As new to omni-channel of It’s third Ahead. Think keep messaging e-commerce out that engagement. the an campaign Think terms and media great

marketing e-commerce is area. So, big really a

technology, the projects are provide are expect to we of simplify implement you Secondly, on which integrate beginning going investment. return of these and the when return, we’re very it a to exciting number are projects, confident business pretty in large we mentioned, to terms and really a

day accounting work one. systems We simplify across kicked to moving the company. up off to multiple in first standing payroll investing network. processes our ERP We’re the quarter, also we’re store from our our And in

the We’re putting the to better enable in serve a our customers. XG stores network for members to team really

fourth those on technology obviously then So, finally, very good made, some well. of pretty once eventually roll inside branches Worldpac talked they and return And the exciting in off investments there’s about quarter those. we and are a as

really we having. we’re that summary, in top So, momentum line the like

encouraged we’re costs leveraging in other P&L, the that be long-term store that are opportunity But very we’ve the in hours change our with and right the and ongoing those way and throughout the costs work out fact investments confident We’re that make margin available. improve and within we the is service take to we’re organization. along customer past going be the the costs talked about in when to the we the we’ll the have efficiency

Michael Lasser

And distribution experience Tom, the into that savings things next just centers. comp as if some costs investment, experiencing you’re some you B; year of environment going you’re transitional the could to and pointed some like incentive A; I your out said, will think of you for the heading and you some this favorable, be year plus you’ve industry together tie things consolidate

your should next back directionally, higher? year inflect just that So margin be should

Tom Greco

February to our expect We and call. expand update in you post we’ll definitely margins next year

Michael Lasser

much. so you Thank

Operator

you. Thank

next of Our with Bret the line come Jefferies. will Jordan from question

line open. is Your

Bret Jordan

morning good Hey, guys.

Tom Greco

Good morning, Bret.

Bret Jordan

over that take you more think, time that at XX%; little the had a where guess, look now looking you number to? AP to sort of I bit can inventory, it, think you do to little And at you

Jeff Shepherd

in and Bret, an time at it into quarter we a get past, said, upside really enterprise the through, got existing terms We’ve about That’s and unlock. the those time. getting it low-to-mid think there, place XX%s. you’re the lot talked the for throughout payment We’ve It’s our as seeing existing the flow think get beginning the seeing of we and inventory as something flowing and vendors, to continue to through the all looking unlock. to right takes inventory the we’ve to level at with as solve as payables. we in the over we that terms. of We’ve it for continue unlock going Well, we lapping can but potential that’s we’re about talked negotiations

it seeing the of first in here quarters XXXX. three You’re

We’re very confident that’s future. going to into continue the

Bret Jordan

there? Okay. on the Walmart breadth the talk commodity a the maybe overlapping, have but about mean of And question website? going of you then relationship, you’re be you’re you be going inventory not that offering I to walmart.com through perspective may that SKUs to one could showing number obviously

Tom Greco

Yes, here and disclosing built excited that always I advice. we’re about our value we’ve partnership. but Bret, not to pretty convenience, trusted mean, on the compete availability, speed out we’re Walmart proposition

this your have potentially So walmart.com. they view Advance to an us more they home on options and that to question direct and value customers. can people obviously fulfillment or pickup today products And extend in of proposition assortment more an that in many can go store many terms shipped have on have essentially, gives walmart.com to piece, opportunity on the

excited we’re not terms out, about specific pretty of right plans but and through partnership in working breaking we’re assortment, the now. our So we’re the that

Bret Jordan

you. Thank great. Okay,

Operator

you. Thank

of the with line JPMorgan. comes Horvers question next Chris Our from

line open. Your is

Chris Horvers

Thanks, good morning guys.

Jeff Shepherd

Good morning.

Tom Greco

morning. Good

Chris Horvers

nicely is EBITDA starting The here. to grow

inventory projecting the we’re with and think the at inventory. I million the of year to here end AP the $XXX cash of over

thinking said that about here can you back to know year. how million half about million the I a talk of for $XXX the you deploying So you’re $XXX cash?

higher then $XXX to an think buyback how term, done. got unlocking and the You balance your there Is take opportunity do you views are around about sheet? long million that what

Jeff Shepherd

returning more high priorities we’ve – There’s mentioned business. projects work maintain we’re a reinvest haven’t there, excess Yes. focusing cash do Tom certainly to those to want and then shareholders. in the on quality to investment right rating, capital we’re grade few and Overall, allocation that our now. already that of in We launched changed.

changed. those – those So haven’t

We’re not buyback. changing our of anything in terms

that in million. $XXX still to of range We’re $XXX the million

post As in we go the have into then for you future that about into and talk we’ll February XXXX, as we’ll more the bit a said, little earnings AOP call. Tom

Chris Horvers

there if minimum $XXX this since guide out cash the a that low is Understood. there – And million, I $XX sort like certain it’s I of guess follow-up all the that business because internally – of like level that, of then? future Is then, the and of historically, is it’s you’re a look to of million at not the targeting as sort cash to base look back – is sort as good much a you $XX has grown that million. to

Jeff Shepherd

decent a guide. Yes, that’s

got we we’ve the approach We’ve we think opportunities change formalized every this. I said CapEx. do project. our to capital though, allocation, on I in specifically committee, in with Like very look the we’re Very at going we disciplined role hand. have had we some of significant single that be cash how very how a around

sure right making our for shareholders. return the getting We’re we’re

Chris Horvers

Understood. at little thoughts – thoughts a looking enablers maybe versus margin chain assets that looking of the the some Reuben at from had sort bit to you hold unlock question supply the any time from the supply plans; that is, chain And long-term need buildings of, that the terms last of then, in around a now he’s perspective technology you early story?

Tom Greco

to Reuben bringing really Well, the addition new our been first his experience dimension He just team. more supply has with substantial all, but much broadly Sure. not omni-channel chain, completely an thinking. given Walgreens, exciting to a within previously. of is

is dramatically here, we’re Chris. the And within which I that blocking is chain. big execution our opportunity think to improve supply tackling talking about first is the priority basic one we know a the here, and

the store and in has supply of improving made we’ve as perspective jumped has on weekend, units well. the along lot don’t a think transaction, improving per scheduling come progress with I he chain front, quickly as the on that our close certainly think I rate.

execution on supply focused chain. in the basic very he’s improving So

he it it. the was supply agenda, the that of involved chain longer-term pertains in intimately As agenda construction to and

familiar DC end optimization, So that. he with optimization. very market on, with is store the optimization, the the very that’s aligned He’s going

I student one execution supply of just but within body or better. and through metrics the But, you’ll on take big how asset left the that elevated we leveraging thing have that advantage see an them continuing elevation is anything on and to chain. asset help that, the focus the us full think the an execution no like base think – significant to

Chris Horvers

Thanks very much.

Operator

Thank you.

Our next question comes from the line of Seth Sigman with Credit Suisse.

is open. line Your

Seth Sigman

good the we Thanks, and guys, margin. question nice a My was trend. morning better quarter. bit it gross primarily Obviously it’s the is on second of little expected than ahead quarter

a You including supply discussed results chain, but positive pretty headwinds the significant seem imply offsets. in some do of some the acceleration to of

that have on So, positive offsets? acceleration Thanks. driven wondering, I’m components more in the may just any color that those

Jeff Shepherd

Yes, sure.

talked me color that additional of some through to remarks. mentioned prepared Yes, we commodities the and just our and have it headwinds just Let in we kind chain walk you that in in give about supply tariffs. you did some addition and

pretty tariffs offset in but Now and immaterial quarter, pricing MCO actions. just those those together, the completely by were grouping were

inflationary So we those were headwinds able to through cover those actions.

we our expansion. defective, are really GM inventory; in slow-moving for the and productivity addition, around these the shrink, continued In efforts catalyst had improvement and rate

our working is at inventory addition which level. we’ve moving, the on effective So process more managing something been all slow to looking macro result the a shrink, the in the at is of year which managing really

expansion, had to we our So product And mix build gross continue we those positive drivers can primary on margin think the and well. as we are also of that.

combination So the all of really the are drivers. those

Seth Sigman

be some there are last external realize pressures specifically then on I And you as thinking you But into supply from think into quarter cost are how and move just, I great. the side, fourth Okay, are higher chain XXXX? may year. that that lapping the you about new.

Tom Greco

Sure.

you’re right. So

transportation are the centers. saw the just we it was was about that we costs. to supply the that pressures the fuel lapping actually in half, specifically of And and Houston majority As relates start-up Nashville still inflationary and chain, distribution

big the was driver. that So

We’re lap still the in essentially some cost should here start fourth it and starting that going going of we in the that’s to fourth see diminish fully then start-up quarter, to in quarter XXXX. to

So of can through I kind that. think way that’s you the think

Seth Sigman

Great, thanks very much.

Operator

you. Thank

Our next with the question Simeon line comes Stanley. Gutman of Morgan from

is Your line open.

Simeon Gutman

was isolate Tom, third improvement helped your opinion, you to internal my question, you mentioned, better quarter, think much of others? some than the getting morning. Curious of versus changes on the as can where helping more backdrop demand markets how the Good the well? if first weather maybe I get the assortment

Tom Greco

Sure. Well, both of feel great all, and quarter about the performance progress. we in first competitive our industry the

if basis a GDP, to the about how trend unemployment, I at ongoing. that number you going got I terms exciting my remarks, aftermarket, said about mean you’ve prepared points it, put that’s an industry, we you’ve really trend would basis So, as think at and XXX improving in keep points Simeon. look to a growing XXX depending the that’s for you reduced got year-over-year automotive And in of vehicles the in spot. sweet

row years. five for the vehicles and three fact grow the to next seven older In years expected previous years for a the are and having in declined

for future the for big bodes well So swing industry. the entire that’s a and pretty

I last I attribute have. the in Central would our geographic we of also stores think, say the improvement quarter the some Northeast year would I footprint of in and to the country. North we by disproportionately part the suffered having

benefited. this I year we think disproportionately

year to XX, year-to-date XXXX the performance around basis. about think zero kind say XXX of XXX We a ago points on like is points, versus in call I you’d somewhere geographic industry improved plus footprint. So basis

improvement like professional out and omni-channel there. our around would better and XXX And driven a accelerating attributable at XXX have trends basis in point stores points, our so business, in industry So visibility that points to the cross-banner compared our DIY call the to XXX – initiatives improvement the is I the in by would include execution effort. we things

the pleased So with we’re industry. the improvement bottom really in line,

the We’re we’re making. excited next also year competitive and about progress that

So both think we about of those were split equally. factors and them I

Simeon Gutman

product, biggest Okay. making Can are it within opportunity think versus gap progress what’s many what fixed X.X is ago? Is – the than your – today, too is looked the have when two touches you years any that peers. years, assess you cost against the it and of And at you on too gap? this you different again, answer much the margins, you

Tom Greco

believe really we can it the I margin mean think, of set. goals I Yes, that long-term all, achieve isn’t. absolutely we we’ve first

our finalizing an plan update right our We recently. now. with We’re shared board strategic

our of about think – balance and structural. year-end addressable consider XX% we to it XXXX being XX% that is X.X% with primary of competitors in you you the If to margin compare margins absolute our of XXXX, gap

areas one very balance we’ve we’re streams have. a focused large to on. margin we really to with So four choices addressable work expansion growth make that we’re those of work got key opportunities that is have and the the that share equally opportunities the fine-tuning got streams, areas. We’ve couple each against really we There of

and So, very through excited value of topline sorry, about a drive flow shareholder to growth, our cash expansion, combination free market margin ability – improvement.

we think over balance share with time. we So, the up expand gain of can margins do and both ramp those,

Simeon Gutman

Thanks.

Operator

Thank you.

the line with comes Ciccarelli of Scot RBC. question next Our from

Your open. line is

Scot Ciccarelli

Good morning, guys, Scot Ciccarelli.

Tom Greco

Scot. Hey,

Scot Ciccarelli

out Tom, trying you to there started trends improve I’m business. some have guys meaningfully made of lot in pretty that cross-banner is have can isolate, Good, a difficulty but rolled visibility. it you sure be hi. since coincidental, Clearly to the changes comp to

then I to drag that not that, wondering at optimize optimized visibility. it’s Obviously a to of how this it. might impact was trying has though Thanks. And been you’re be margin able So, the been, topline quantify, has from to what even much stage. cross-banner specifically, related if you help

Tom Greco

about to give the then I’ll the cross-banner perspective your Bob talk impacting how part of you a Yes, question, it is topline. I’ll flip over second on to

roll that that On before planned for we want we know places we knew to start going implications out, as and sure optimizing. the to out that before sure, we to of this have system deliver hadn’t drag, make are to parts start to been our we were we inside margin turning cross-banner what the

the widely our to now, at we that Worldpac, got the like that And the prevalence Scot, of so of varies of look on better each that density, have, pretty and impact we’ve what starting we the a penetration optimize and looks idea cross-banner because overtime. country, based absolutely across store DMA will we’re

can flip it the to how he about talk impacting Bob, over topline. and I’ll So it’s

Bob Cushing

Thanks.

the certainly customers know, our that of to we’re Pro, we’ve developed into portfolio in new the industry-leading again, that ties certainly other platform. visibility our there, saying you as seeing with of course, brands, this all technology markets, what So, right from Advance our cross-banner yes is BXB

of and We’re basically on seeing not But conversion but from of portal technology cross-banner of the banners. seeing adoption look most in customer’s to new benefits we’re recently, access of only and that Again, across business; has importantly, side. of single there. futures there, higher course, the also certainly the when MyAdvance, sign-on at order the higher that’s the higher value, transaction standpoint tremendous ease increase all we cross-banner rates, doing we result full it our out and the put

which more level, from the at basically So, cross-banner driving of cross-banner side vantage and to store is assortment by again, that market strategy market our it informing building we’re the point, the is also, assortment down access. on us

tremendous and on that. to we’re overall, more in out; there’s customer, basically seeing day of improvement So, yes come to and and saying our day amount

Tom Greco

additional – so every the the think in I single one benefiting. quarter Company question I’ll inside your they’re Yes, and all here, that grew add Scot, raises banner

great think had you Worldpac, International, about Autopart Carquest stores, Advance So our Stores, Independent’s quarter. a

really leverage So our assortment of now and enterprise. it’s has us across the banner breadth every the helping cross-banner access to

Scot Ciccarelli

And again, of it’s had? science, exact a a on it’s is but kind impact the I way know not number there put to that

Tom Greco

initiatives XXX about believe to points. driving spoke We our are we again, Well, progress.

also efforts DIY our are giving growth. We omni-channel incremental believe us

an evenly DIY those So, we improvement of – Pro. between year-on-year in and split kind had

on you’re it improvement. So and mean impetus big the I right, to a number, has a been it’s significant you our we’ve cross-banner, a can number I got math. mean do

So do you can basis the attributable the to math that’s XXX of own performance. our points

Scot Ciccarelli

Got it, thanks guys.

Operator

you. Thank

line comes with Our the next Kate from Citi. question McShane of

Your is open. line

Kate McShane

with go taking how it’s just the have through Hi, closed if some are as the seeing what rationalization, thanks of us to supply the and think could been back My you walk are that stores what my question. of the much chain store for metrics well. wondered you We impacting questions you margins?

Tom Greco

Kate. on XX basis there. stores year-to-date to XX excited up right question, improvement stores, making We’ve – Good been We the that about a really we’re closed. we’ve about we’re were Sure.

lot sales, transfer XXX close I of think mile question, the We’re previously. a because of just question, stores, measuring sales, big Advance and want plus plays And us is obviously we that closed store play the in a obviously sales Carquest I within each the want that cross-banner we earlier role capturing mean role carefully with the when about the a that Advance of one the that essentially we’ve very And got a obviously had that’s helping stores and other sales don’t Worldpac are right, of that X.X other other. store, we lose to the the to was to transfer a that to banners.

So, make although we sales employees other we we the the that easier that Professional then get that best sure transfer. sales through and Obviously, get parts, sales the omni-channel people the can retain at when thing to measure efforts, sales on after the can able And measure is change. DIY, to the transfer the also. than we DIY we on are that is we very make we transfer

So we our in the about good team. we’ve made feel improvement really

We’re seeing two were turnover levels down they significantly years are They ago. from where stabilize.

And did this the a retaining store, that a past. close we a job want lease metrics time. don’t then of with good with down to make is lose feel our the very closing to any sure outstanding We we that those initiative obligation. we better in to obligation. thing where than employees we store key those customers there we’ve drive minimize have the and when three But about the store, might people want very and is in over the positive be in done connection we cash costs our third lease So much ability flow each an

the at. are those So we key things look

Kate McShane

then, quantify think – is could a question, I transfer time? ask way follow-up just rate at do a you is this And if you what that helpful. to have there That’s

Tom Greco

the that past. we exceeding about America the of to and those miles the we’re may at in we but break where definitely out, we’re stores store within store you’re above that sure can planned rural where We team. can’t make learned far store, if to from I we’re that’s think closing kind sales. that don’t at XX we’d in – looking a expect know not what we We’ve want have mean transfer Yes, you home actually about sales for of talking and experience the we a it. levels show that had we had up

flow a that less making that years cash transferable we when in of look for the that still just to for is driving close much the very rent, area we next we’re make that we sure for we’re store, we’re flow measure those at reduce and inventory, cash the decision sure cash store, it over that less metric the So cost and we area, not costs, outlook because the less several not. things, in-store or positive, all close as that’s to area, to make flow the

Kate McShane

you. Thank

Operator

Thank you.

comes next of Matt line Barclays. the question Our from McClintock with

open. line Your is

Matt McClintock

morning everyone. good Hi, Yes,

Tom Greco

Good morning.

Matt McClintock

then I’ll quick ones let you go. and two have I

a give just overlap Thanks. Is advance.com incremental and to just, me new understand is I’m on or shop you customer. would versus of customer between Walmart, Walmart new And the one an entirely first trying that Advance. for kind The DIY. why customer walmart.com can of idea –

Tom Greco

Sure.

and profile First is extremely consumer DIY the of Walmart the the Advance all, for shopper customer similar.

at partnership nation, there someone those Walmart very set obviously retail be to things for else. alternatives a had out absolutely on the We of And so that substantial is some having done. there, incremental strategic sales most complementary we skills So boded omni-channel out where with to there traffic well. in Matt, top the all they our effort believe each could us. other with and respect assets of was are of right building We different work looked a

a about think that at to website XXX coming every four Walmart. weeks million people You

We under many come it is people have not our website to every weeks million. how XXX four but disclosed a

is Advance some on has that this. website to going Walmart be that the been a to terrific have Walmart there to and partner come not people So that go website

that have build that together, brand of drive we believe We’re think website. it really Walmart we store-within-a-store lot a awareness. and with an it helps expertise can sales our going Advance incremental some category on to their of We with. lot a helps – And

excited – very partnership the rather, aligned about very consumer lap sorry. overlap So much and

Matt McClintock

years, about, macro taken clearly for next was and is, – Tom. this explaining second for you’ve over great pretty then for my – the positive that the Thanks underpinnings underpinnings did which you the And of market job are the put of year, being just with the a question macro industry the share that cetera, new you couple in wondering launching some with terms more impressive. forward campaign, pull I’m talking going on your pedal to those of down aggressive et market Thanks. you’re marketing share. the starting a of of after investments foot

Tom Greco

they definitely we feel when better much Well, into the about store. customer experience our come

in our great you say, you to drive of you were XX group They now wanted we restructure entering field second somebody it’s sure your there. are I divisions over and went will their to to house at don’t a invite make to they spot all As terrific than clean they and team and that We’ve executing last disciplined They approach had tell executing We two we for have. and their out well regions. a dinner in better unless leaders very know. as year, ever WE business. got year. the are is

when ago. a a comes now, a into to much have experience better than So had store, our customer going they they’re year

We’re promoter mystery much the of are better. of things our shop seeing number profile like the customers, that our net measure that times score, we we in greet metrics all in on

the putting advertising feel on air about you invite to good in. people So

difference. I So the think that’s

we our to our great proposition omni-channel we to come in extent, believe because visit for. a got that invest are going we’ve media to for and So customers us efforts,

Matt McClintock

the of luck. Appreciate Best color.

Operator

you. Thank

with the line Raymond Wewer Our James. comes of Dan next from question

Your line is open.

Dan Wewer

where decision XXX to stores? still then share opening and Tom, out more stores balance had curious, resume also, you probably the the stores, your how against start And to opportunities with particularly West, that buybacks, the best what X.X need you each do those new Carquest can that be there XXX, Advance within is other, consolidated? is are Thanks. you of on many how estimate mentioned mile

Tom Greco

Yes. they do the will the optimize that job we of on know that to footprint. store you much a have, – better Well, per if sales if we you to store. average Dan, per you continue mean primary first sales if definitely I all, competitors, our average contrast guys

just our footprint. we’ve of where that earlier, with what to part are other really you optimize competing for stores and sales we’re going I is, each continue as mentioned got described, So to that, that see we

are cost the the constructed our to given bunch country. five-year DMA that got somewhat variables, years markets net looked you going we but that in to West, going different. across of to out the grow a each question are be is we market you’ve as of how five varied, you we And is, As in and country, your how business our optimize and approach our market, in it whole about figure footprint these is in you market your to because going of every considering the to plan, the you’re over when out that, a do

we’ve you a where which that of mentioned are you’ve footprint, that’s a the in got so lack a about optimization some we’ve where and we penetrated. very a got And much of west, less concentrated as footprint, efforts where the of asked density, see you’ll lot

We’re going very take to different those approach a to markets.

So Worldpac branches, as we are mentioned. opening we

and and markets technology to e-commerce past going DCs and will. believe comp stage CapEx we are in – than sales our sure in that us on predictably, you’ve and e-commerce consistently, bulk that in this we stores investment we reliably, we of up at, we is we profile our at be we look shifted where technology. our investment demonstrating where the openings. you throughout the to But in off. We’re first that stepped we with investment footprint, that have from CapEx We’ve the expand our and I making reliably, it’s are opening will were a profile the and have consistently, seen some driving country. where is at different opportunities paying the have stores dramatically And see think, But

Dan Wewer

and forward, much, three when a then, Mississippi, And facility? common by out will question that about facilities chain quick too and you’re Carolina, base Advance supply geek in but a Carquest this territories, now South you the in stores changes going not just supplied those closing to the at Texas, look

Tom Greco

first all, of excited. Well, we’re pretty

actually the really Company. Chief helped and I a in that here source miles hundred obviously, accelerate Carolina come plans Officer have we’re stores adjacent in us. sitting a in big this mean a of to that stores new Raleigh, away. cross-banner we for another the North is to distribution Advance center red product several distribution ship the replenishment geography. cannot or center And has Those today so-called lot tech from Advance inside Our a opportunity Technology

we stores. our cross-banner to take out – to So, parts and going speed replenish get stem to to are the capability course building obviously to the of that’s miles our and improve

expect XXXX. that in that’s against the to we sometime half latter of active So project and an deliver

Dan Wewer

that Advance announced Carquest not you’ve but closing, that shipping still or banner, they’re an both? facilities three these either just a to be you’re But going

Tom Greco

the three your being closing sure understand make we’re want Well closed. question. to are I facilities I

Dan Wewer

the to Yeah, just curious are slack? pick as facilities going which to

Tom Greco

at the well stores another today, point Okay. replenishment the have Yes, we distribution have center. don’t we capability, because comparable to essentially cross-banner ones

effective of and to In the do stem more also the in design to DC, stores optimize store of much Nashville, optimize Advance an Advance distribution have future, we the case to miles. and Houston as at DCs. how the terms which center DC had we’ll Mississippi, ability So network which the was a are footprint, Gallman, do the DC in we point we

Dan Wewer

you. Okay, great. Thank

Operator

you. Thank

comes with of Deutsche Bank. from Mike question the Baker next Our line

Your line open. is

Mike Baker

guys you me OK? can hear Hi,

Tom Greco

Mike. We Yes. can you, hear

Mike Baker

to said more the I period? you current confidence the Great. I in by quarter how us ask give Is have you you quarter reference you, the fine, trends. even the the third And you’ve or wanted progressed to that color in continue quarter any trends in year-to-date? that third can fourth on guess

Tom Greco

Yes, distributed, the fairly Mike. was evenly quarter third

it finished. we’re about excited way it started and We the are very the excited about way

all out. pleased board, And in as mean the a quarter are was has So mentioned again, strong I I we across the it and started with way pretty of banners. QX the

you formulary have number achieve. number, not on we quarter. think the that fourth obviously that implies we’re can we a numbers We gave number the and the sales So we quarter a one in giving but is fourth specific

Mike Baker

income say you Would is on to guidance or prudent, fourth operating implied in similarly – that, the follow-up same-store that And said the for sales that was prudent? margin margin operating the expectation quarter words. had operating your you

Tom Greco

Yes.

Mike Baker

color. Thanks. appreciate the I Okay,

Operator

you. Thank

Greg the Melich of line MoffettNathanson. next Our question with from comes

is Your line open.

Greg Melich

follow or was Tom, did guys, traffic laid do I that? want Hi, improvement, X.X% counts. In other on and What breakdown up on the if a to nicely. had the of the you congrats And a then, thanks follow-up traffic out actions. quarter. it comp, I transaction positive on we the transformation words, was on

Tom Greco

Greg. Sure,

did job side. in describing also Bob a transactions nice average a great transactions, up ticket we the saw on Pro side on we Pro saw on earlier, So and uptick the

the the of our measure our front, them sides so across transactions us helping transactions on be the lot good both online both we continue in helped some categories we significantly. growth improved really seeing that growth obviously omni-channel, retail up saw On has been has and transaction but transactions improvement on of retail. seen measure that really a Broderick the on DIY, So in teams Mike in some work, and Pro. to DIY And e-commerce time. of but We an category are we both doing the quite haven’t is with for us teams, we merchant business,

flourish. to continued has business online Our

back up was the top If September of XX the online see at very published reports at the our some of right XX%, traffic months omni-channel, on which XX, that ending companies. three you you’ll look retail was

Average and business. DIY the online in business than that’s pleased overall, with in the So we’re transactions But growing transactions our business. incremental ticket to up and online was because retail obviously is very tickets quarter. translating the of faster terms pretty significantly DIY, partly both in

Greg Melich

to And that. clear I just make so, sure

at in were bit, a the fair? but if company, they whole DIY. been up holistically. And they it Pro a For Is that up, have transaction counts in little more were than look you still might down

Tom Greco

DIY… up, overall Yes,

Greg Melich

– which Pro lot. than really worse than better much DIY up, Overall improved Right. a DIY

Tom Greco

one. That’s was right, yes, retail the DIY

Greg Melich

Yes, retail. DIY

Tom Greco

yes. Yes,

Greg Melich

Yes, it. got

that around just $XXX was want amortization. make One, And transformation to – on I the costs, if then second you just year, Okay. they’re because like running thank for million looks you about transformation I’m sure start that a million know we think we those take they’ll year out it to break mentioned trend some as continuing $XXX a out, this those you’ve still of and thinking for that should a a correctly years, that assuming – when above should expect and costs or year’s to on go that? fade, should

Jeff Shepherd

year, for and of the the to come range we of in think, range. to $XXX low right. Yes. you’re No, think million do million end going gave $XXX that you we’re We a to I

a for year-over-year basis, going we if take trending on do in year. going So million about which start to about you to time that’s over $XX is we’re $XXX the million, be going amortization think back But reductions time out million. would diminish. think at some the to We that. we to that $XXX to It’s see

Greg Melich

it. Thanks Good guys. a luck Got lot.

Tom Greco

Greg. Thanks,

Operator

you. Thank

question of of Bank line next from Our the Lynch. Suzuki with comes Elizabeth Merrill America

open. Your line is

Jason Haas

curious color my any Jason for work? could the Hi, thank on Haas this how economics taking of for question. partnership you Liz is you provide I if Suzuki, Walmart the would on was

Tom Greco

with pretty breaking Jason. And Yes, doing but a to break we’re unique that the be about again, to excited partnership, pretty economics. Walmart. we’re not It’s going out we’re going not we’re what out

Jason Haas

would the you any on that? the know yes, in? terms that on just come then, more – of first but any of color when Okay. half I timing said XXXX, in And color

Tom Greco

to tell will. going first of year we’ll tested the you validated. of than of of of Sure. the is It’s and the Gantt them. But a if one with get can be this have of be into you I Other that parts in we’re some to – are the that phased be is part those approach. to things rolling I with chart, out not parts doing I’m it going easier it half mean what and there specifics other

on the the We are we to both sure make have customers and that experience with are what we have us of Walmart customer customers – Walmart’s customer that arrangement The beautiful want we’re our make the sure is to focused thing excited really delighting about and customer. very about offer. to the

is of little needs complexity So as little that it the we’re it. validating a out that parts where more roll a are be complicated bit proposition we before that that them to absolutely to scale and have we

of make half front we So a It partnership, so sure, in it multi-year get see part right. you’ll rollout the it to XXXX. of want is we

So that’s answer. the

Jason Haas

you. thank Great,

Operator

you. Thank

Our comes question of line from the Nagel Brian Oppenheimer. next with

open. is Your line

Brian Nagel

Thanks morning. good Hi, nice my question, quarter. taking for

Tom Greco

Thank you.

Brian Nagel

also of details with on and what an on on wanted ask lot I mean your early any you point, second this not simply plans this Walmart? to a and Walmart, own your your Walmart pricing it’s you’re is you what for addition will be quickly So And just initial replace then I it I you’re providing all between I the on recognizing know website, stores, online? doing do done own relationship or question, now, thoughts your your does in already but have that it does what site? at to this with does impact site – mean

Tom Greco

pulling of see store, proposition DIY an industry, extend we’ll your change in Brian, you get value Advance wipers And to we’ll more battery, free charge always think best in have parts been in free. convenience, this an out the services, Advance have the proposition customers. into about the industry, as for speed can we and of to your an assortment we store, we best has windshield first you value opportunity Well, the all, our and the fundamental

with offer just advice, Carquest benefits not we’re Mike I how investing train, lot to speed-related our Institute then a members, on mean convenience-related training and own we the in Broderick We but our customers. people. really number team the of have of customers. of and Bob’s our And a work we trusted done Technical

of extension to value proposition So that it’s Walmart. an

pricing, terms we of pricing. In our control

to we’ll website. Walmart where are the sale the going Walmart able our own and the we to it don’t. through on offer we – the for is don’t, arrangement pricing a website, we’re we But get So price, get the an we control sale, if

– every As to going tremendous fact the than site our we on there and that that our Walmart strengthen to in of has – progress. to experience, with to to own down to pertains we’re the to topic We’ve continue success own every we is and of really fact doubling terms the partner from what going literally other and our And important it aggressively. no meet than of do Walmart week it impact we’re online that strengthen online site. how made to and on strengthening have and We extremely with experience Company, own believe our continue our the it. we’re we’re on long-term we’re we’re We it’s past. doing learn in aspect site the that going better own

website, plans So anything there’s to no our slow on down own it. if actually anything, we’re accelerating

Brian Nagel

picture with backdrop. has internal improving of then, helpful. with Clearly highlighted have also follow-up a very that’s if could accelerated that question. it, your do Got you’ve which And lot, to results another an demand kind I bigger initiatives, just

Your competitors done same. the have

be or trends, in due whether several at – car – of be happening As they’d as or – of guess or the that’d some is – pent-up commercial, is of the the there there of to had the DIY is your truly it, demand patterns look whether you that there just I data, issues? park look customers, quarters say buying signals given sort weaker you are a just weather resurgence a what’s at is aspect we now to

Tom Greco

I the last to question, most? vehicles has It’s X%. are well of miles to that correlate that’s your above park and spot, car that the that’s improve. on one been really improving, spot let what driven, vehicles declining. I’ll that park, up to a It’s the driver GDP, car is sweet swung, look was is is the well we’ve in the GDPs sweet over improving question news. there little we mean that demand. a the great no this It’s Broderick things that demand years expect that in The XX the think vehicle to bit, I Yes, the Mike stepped back speak

a going starting five where the is and vehicles have in now. off turn cars row. and that turn. was XX% it’s of you for to Now warranty, to We be the to those the repaired We is coming which population years are need repairs, vehicles up think over, five high knew levels obviously turn vehicle are to years that next it’s going seven and be going from to years

want unit the Mike, spot to the growth a is demand. So vehicles driver significant in of sweet add? do in you

Mike Broderick

a how the and We across to channels we Parts, sure literally all and looked a and very of go they’re discretionary fair at Advance by well into growth. bodes for focus. No as that’s both four balanced that’s categories, Auto that said really we’re lot. at you make category we looking kind as a we’re approach industry deeper – non-discretionary want categories both if you’ve share which actually But our and well it of getting the up, our

Brian Nagel

quarter Thank Nice you. again.

Jeff Shepherd

Thanks.

Tom Greco

Thanks.

Operator

you. Thank

Our question Research. line comes Wolfe of the Chris from with Bottiglieri next

is open. line Your

Chris Bottiglieri

Hi, question. thanks taking the for

to than comps, DIY DIY your we looked of benefit kind earlier, specifically. two little take imply sales, Just of that hoping if seems to points you dimensionalize basis growth that’s at half XXX point know but to less I this

this guess are is, my comp the still question point? non-online exclude DIY you if positive at the So I sales, online

Tom Greco

Yes.

Chris Bottiglieri

Walmart online a here? another thinking the from long-term? level I and arrangement, you of putting to are there’s leg lap this this Okay, guess, when online about how are? the you They there then, you think opportunity is way traffic frame do Like, aside up? growth,

Tom Greco

we others can a but base across not as see the will We be five ship-to-home the just own size universe we feel leg But definitely years business where that category, seeing out. pickup the we’re right. can the category drive the we continue doing. to leverage got We significant that mean I business, number our a within and in buy of up see a asset growth really online online we’ve and are store Chris, our

building team our investing our relationship the they’re desktop We online both excited for business, we’re compensate and in sure So online making team with do a so members really are engaged. members mobile, customer. about capabilities,

has strengthening program, which online. We’re for implications loyalty our

a start way, DIY whole keeps So are I and that Whether some going out search go search part like by mobile coming see there’s XX% of have we that of the a our online, build think Okay. experience. as a of elements that customer we something up. with transactions it bunch a type But over that now, the for together or search we or within store a continuing to for that’s – up

strengthen also overall over hey, halos that online. not online something experience. want to because to the it’s in-store our just about, experience somebody We that to want I buy believe we retail So

Chris Bottiglieri

you. productivity maybe guess, then, to more Got I store, you think And of optimize more this, of as efforts online? as you’re how do of some what you of the kind labor in kind the doing the – element about transactional are shifts

Tom Greco

centers, inflation matter. in very we’re wage guess, our it’s I whether we’re a for point, of on our that bit our we about Well, across I that. have, certainly everyone obviously talking distribution that and seeing mean, focused is starting business stores different Chris. But or a

more think much I to we have improve. opportunity

which piece and costing profile store field cost in time/part project. will, work is our managing hour, to much us do better job We’ve you what up cost what per down an it change so a driver on everything in of time in-store done of does of done work, how a if ABC each the lot to of store. that improve mix, a so that’s is have our there active the full speak, terms costing, of the to think environment, leaders I do key we the and

coming As with come to in we’ve extent make that a having engage need the out. of of decisions, of them can very education some that in they want and time, gives just save that customer DIY platform the to online to need you a obviously strong the more information customer see terms in got XX the orders and instead they or XX for minutes online, to

very their mean we’re with for easy members, pickup routinizing and come online I buy in-store leave. the making customer experience and it to So, that team store in get our part

speaking Advance and professional phone seeing we’re things our them our the he Pro, many of – do today shifting each that customer out off builds natural to online and similarly So MyAdvance they earlier, longer that up about buy it tailwind, as those do now side, Bob no of week. are they’re – MyAdvance, to talked tick the someone more as part on more on

really So you can an actually to that that with omni-channel your build world-class labor it customers, help the for is experience cost time. the extent you over

Chris Bottiglieri

Thanks lot sense. help. a Makes for the

Operator

Thank with you. Wedbush Seth from our Basham Securities. And of next the line question comes

open. is line Your

Seth Basham

morning. that and mentioned investments well, weigh provide on done in some quarter. e-commerce Can fourth more engagement the question is as on bit to lot you a might what a My first margins good as you’re Thanks year-to-date? you’ve investing color now little what to you fulfillment in operating relative

Tom Greco

mean that Sure. ultimately we as optimized. shipping the do. you I tell make mean we’re not their We’ve optimized sure many buildings from across to as and just would I we’re not I we want buildings got many stuff we’re will country.

we get to easier As traffic at now buy aggressively how square part to know, driven how as do know opportunity further there we How online updating we of for Reuben the there done optimization. access to to more fulfillment on make do be pretty lot customer our million lot has for But in, a is that’s the When it XX it you of And come lot So, agenda, part assets. easy engagement more make work our efficiently? parts website. store of home? much honestly, feet of we’re a the our for ship essentially that you it members to out ship right we’re building got team of we And we’ve as and and do a pickup of dimension? the parts?

our because it earlier, helping It’s too some right cross-banner things ultimately much costing do we you We of that are that all of can came up things what the line. cross-banner the it we’re make replenishment, to of term, will it’s much know not delighting able to visibility, customer just to focused we going from now to because matter down we short slow have the us efficient a in drive top those those buildings, ship us But being costs. for that’s more ultimately optimize know, do. on of piece and more

Seth Basham

quarter quarters? been on of in would they Got it. investments, higher than recent in say that the will pressure margins the operating they’ve these terms And you fourth in from be

Tom Greco

with they’re that were not all think in of just as lower have honest, percent overall a a I they that, has impact, different. sales, and quarter To be where the right, an in line – a terms number line in or we When top have the and absolute I that that absolute side, CapEx headwind. OpEx will the not investments right much. a technology the on making. the attract that attracts is make away right of say the technology OpEx part gate, it but we we’re of we number out investment that’s

Seth Basham

question from Enough. in us to other as tariffs. able exposed pass right around much my how scenario follow-up COGS be unfold? to And XX% terms price mix the to tariffs see and mitigation you now relative is have expect what Fair of the you the Chinese strategies of particularly we tariffs, Can to you along is remind a

Mike Broderick

Good Seth, morning. this Mike Broderick.

a from at We non-direct. are looking XX-XX direct versus

making mitigate to price that match actually only traditional put pricing we’re e-com DIY, and what channels, starts non-traditional do looking with all four Independents, market relevant, to the kind we if that’s The both actually customer, that last number we and then So have sure of we actually the is our we’re versus Pro, to. review our at thing customers. we obviously and do the we

Seth Basham

direct a – XX-XX that’s of what? of indirect that And off of COGS, of percentage total

Mike Broderick

Yes.

COGS at about So, year, that of the we’re total say million. looking our would $X.X I for

Seth Basham

you. Alright, Okay. thank

Operator

Thank you.

Our next Imbro the from Stephens, Inc. Daniel question of line comes with

open. is line Your

Daniel Imbro

morning. good Thanks, Yes.

the few online you in of trends online your home majority that that store we e-commerce Do ship or being a over the store, orders service that the ship levels sales mentioned up is guys further obviously do think How to see think shift to longer had think Just store? a growing? follow-ups you do home but up picked front, the still on of picked in half keep are toward time? in term you the you over

Tom Greco

that’s expect. of to grow all, First we level. an aggregate at ship faster, we said, That that’s modeled to what home

to have market which pickup As shipped our rather is day we stores today and start you to for customer, minutes benefit than pick-up something get a great one of a – literally home, the the in having to wait to is can XX parts. which

think which performance to to continue own that online little to in brand So today. more, our We bit store, we’re the we’re market start going buy improve pickup going a to can on Daniel. pickup

is would opportunity expect right online into experience at mobile whole that faster. stores and phone industry to from So a opportunity improving the home for level, the But big our we Advance. the to grow ship

Daniel Imbro

then, follow-up partnership. quick the a on Walmart helpful. That’s And

to To plan Thanks. Will stocked those a Specifically, how stocking or on at how that be at a Walmart a do store guys my have impacts? you you you inventory Walmart will do think DC orders? fulfill understanding, hand AAP inventory to an up could or potential store, it but at about on customer inventory? pick increase

Tom Greco

than to with got obviously said some learn others. earlier, and things Walmart, a to easier arrangement we’ve I do Well, this lot as are through

That’s So it’s important important sure very the to customer the delight us. to team, make with again, to Walmart we we’re going that this. very

for in pickup mind got is which So website as to through But manage. Advance, this, easier the go today, through delivery of order thousands vehicles. at keep obviously we Walmart us generated we’ve is

decides it can to our up Walmart the they – centered just So, Walmart the standardized. to that all essentially customer operating at service stores, to is making But procedures the we’re pick want customer enable around same-day ability stores, easier experience provide need omni-channel it they if get are we We that. to for the ensure – and that of customer. the cultivating that all right, a

So we’ve experience it. got to make sure when that they’re absolutely the customer has with thrilled

Daniel Imbro

Thanks.

Operator

to Greco now at closing no remarks. call I further questions I’m you. Tom this for showing like would Thank turn time. to the back

Tom Greco

for joining thanks again Well, us today.

the all focus we’re implementing with capturing and pleased our the we to opportunity value traction lot for and do in changes and growth in team that thank execute We the on of once really work still again, focused their and the a and customer’s want We’re for in operational strategic approach our success remain our ability partners, long-term for going gained of forward. ahead. our every members our of independent I shareholders. enable day. remain to to We quarter our we’re to, objectives passion excellence disciplined ensure confident and dedicated on we sustainable have deliver Advance

over our we’d like members. Veterans Advance their Before for sincere the of week, military including for X,XXX I all appreciation this members team conclude, celebration Day our with express service, of to the

proud women we of work done XXXX such to as the and you incredibly veterans Homes and discussing support service of continue committed in February. the improve fourth the of throughout who at support help Heroes quarter our Building and Advance brave We’re of with remain outlook look men results for forward to we’ve lives our We in country. organizations our

Operator

participating for This program. conclude today’s Ladies conference. in and gentlemen, thank does the you

may great day. a all You Everyone disconnect. have

Advance Auto Parts (AAP) 13 Nov 182018 Q3 Earnings call transcript