is an automotive aftermarket parts provider, serving professional installers and do-it-yourself customers. Its stores and branches offer a selection of brand names, original equipment manufacturers and brand-owned automotive replacement parts, accessories, batteries and maintenance items for a range of vehicles. It operates roughly 4,770 stores and 316 branches within the United States, Canada, Puerto Rico and the U.S. Virgin Islands.
Advance Auto Parts effectively has two businesses: its core retail auto parts business and Worldpac, the company's wholesale auto parts distribution business. Worldpac is in a similar line of industry – it distributes automotive parts – but it's a completely different business with its own supply chain and own distribution network. The first opportunity to create value here is by selling Worldpac.
Just as importantly, this would allow management to focus on the core retail business, which trades at a value significantly below its peers. After backing out the Worldpac business at $2 billion, Advance Auto Parts' 4,770 stores are valued at approximately $1.25 million per store, whereas peers O'Reilly and AutoZone have per store valuations of $11 million and $8 million respectively.
The good news is that Advance Auto Parts has a relatively new CEO who is extremely competent and up for the job. Shane O'Kelly became CEO in. He has a solid retail background and is a West Point grad with the leadership abilities to manage a team and the discipline to manage costs. The one thing he needs is industry expertise and support at the board level. That is what Third Point and Saddle Point is providing with the recent settlement.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.Pennsylvania