Advance Auto Hires Blackstone
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Advance Auto Hires Blackstone

CNBC reported yesterday that Advance Auto, a retailer of automotive aftermarket parts, has hired the Blackstone Group to advise the company on strategic alternatives. The company’s shares rose 14% on Thursday to $81 resulting in an equity value for the company of nearly $6 billion.

Advance Auto Parts (NYSE: AAP) is an automotive aftermarket retailer of parts, accessories, batteries, and maintenance items. The company serves both the do-it-yourself and professional installer markets. As of October 6, 2012, Advance Auto Parts operated 3,727 stores in 39 states, Puerto Rico, and the Virgin Islands. The company was founded in 1929 and is headquartered in Roanoke, VA (www.AdvanceAutoParts.com).

Earlier this month, Advance Auto Parts announced that its third quarter earnings per diluted share are anticipated to be $1.21, a decrease of 14.2% versus the third quarter last year of $1.41. The decline in EPS was driven by a decrease in total sales for the third quarter of approximately 0.5% to $1.46 billion, as compared with total sales during the third quarter of fiscal 2011. The sales decrease reflected a comparable store sales decrease of approximately 1.8%, partially offset by the net addition of 82 new stores during the past 12 months. Additionally, the decrease in the company’s EPS was driven by increased promotions, higher spending on in-store labor and advertising in an effort to drive consumer traffic and maintain market share in the softer consumer environment, and expense deleverage as a result of the lower sales volume. In reporting its third quarter earnings Advance stated that its operating performance will continue to be constrained for the balance of the year driven by continued softness in its colder weather markets, and lower overall consumer spending on maintenance and failure parts.

© 2012 PEPD • Private Equity’s Leading News Magazine • 11-2-12

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