The complete greenfield implementation of a new ERP system in the U.S. began in July 2024, replacing a 25-year-old system.
The transition caused a temporary blackout period, leading to a 2-week inventory build by retailers, which impacted sales by approximately 3.5-4% in FY '25 and will cause a similar dip in FY '26.
Higher-than-expected shipments in Q4 due to retailers ordering more than their commitments, resulting in a gross margin impact of about 150 basis points for the quarter.
The ERP transition is a complex, once-in-a-generation project expected to be fully stabilized by FY '27, with ongoing benefits in data visibility and cost management.
Return to Profitability and Store Footprint Optimization
Advance Auto Parts achieved a significant milestone by returning to profitability in Q2 2025, supported by store footprint optimization and strategic initiatives.
The company has completed the closure or conversion of 9 distribution centers in the U.S. year-to-date, with a target of 12 closures by year-end.
Management emphasized that store infrastructure upgrades, including HVAC, roofing, and signage, are part of a multiyear plan to improve customer and employee experience.
The store refresh CapEx has increased threefold compared to 2024, with over 1,000 stores upgraded so far, aiming for a better in-store experience.
These operational improvements are designed to reinforce the company's turnaround and long-term growth strategy.
Dafinchi