Advance Auto Says CEO to Retire, Adds Starboard CEO to Board
November 12 2015 - 9:00AM
Dow Jones News
Advance Auto Parts Inc., under pressure from activist investor
Starboard Value LP, said its chief executive was retiring in the
new year as the seller of automotive parts also reported
disappointing quarterly results, lowered its profit outlook and
announced store closures.
Starboard, whose 3.7% stake in the company was revealed in
September by The Wall Street Journal, has pushed the company to
improve its profitability, which the hedge fund has said trails
peers AutoZone Inc. and O'Reilly Automotive Inc.
Thursday, Advance Auto said it reached an agreement with the New
York hedge fund, under which Starboard Chief Executive Jeffrey
Smith would be added to Advance Auto's board. In addition,
Starboard and Advance Auto will each add two directors to the
board, which will increase in size to 13 members from 12.
Advance Auto also said Chief Executive Darren Jackson will
retire Jan. 2 and that President George Sherman will add the title
of interim CEO on Jan. 3, the beginning of the company's next
fiscal year. Mr. Jackson has been with the company for more than 11
years, the last eight as CEO.
Effective immediately, Chairman John Brouillard will become
executive chairman. Advance Auto said the change will enable Mr.
Brouillard to work closely in an advisory capacity with Mr.
Sherman. Mr. Brouillard said the board would consider external
candidates as well as Mr. Sherman for the role of permanent
CEO.
Mr. Brouillard said that during Mr. Jackson's tenure as CEO,
Advance Auto has doubled in size while growing its market value
over $10 billion and increasing its share price to $195 from
$33.
Mr. Brouillard also welcomed Starboard's Mr. Smith as "a
respected leader, investor and valued board member."
Separately, Advance Auto said acquisition-related impacts cut
into its third-quarter earnings. The company said same-store sales
rose 0.5% in the quarter, and it expects them at flat to down
slightly for the current quarter.
Overall, the company said it earned $120.5 million, or $1.63 a
share, compared with $122.2 million, or $1.66 a share, a year
earlier. Revenue edged up 0.5% to $2.30 billion.
Analysts expected earnings of $2.09 a share on revenue of $2.33
billion.
Citing the earnings shortfall, coupled with continuing
integration headwinds and the soft start to the fourth quarter,
Advance Auto lowered its per-share forecast for full-year
comparable cash earnings to $7.75 to $7.90, down from its previous
range of $8.10 to $8.30.
The company also said it plans to close an additional 30 stores
in the latter part of 2015, at an expected expense of between $10
million and $15 million.
Shares, which have increased about 33% over the past 12 months,
fell 9.3% to $176.50 in premarket trading.
Write to Anne Steele at Anne.Steele@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 12, 2015 08:45 ET (13:45 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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