An auto parts chain struggling with logistics will add to the challenges of California’s commercial real estate market, shuttering 139 retail locations throughout the state along with four West Coast distribution centers.
Raleigh, N.C.-based Advance Auto Parts plans to shut 725 stores across the U.S. in a bid to stem losses, making a total exit from California in the process, the Los Angeles Times reported.
The company owns around 4,700 stores nationwide and has affiliations with 1,100 independent operators under the brand. The relationship between its retail locations and distribution centers has been a sore point, with its relative lack of scale of operations in California sticking out for inefficiencies. Many Advanced Auto Parts stores get deliveries from the chain’s warehouses once a week while some competitors receive shipments of stock daily, according to industry analyst Bret Jordan of Jeffries.
“What they’re doing on the West Coast is getting out of regional markets where they don’t have an effective supply chain or the density to build an effective supply chain,” Jordan told the L.A. Times. “They’re trying to improve companywide profitability by cutting out the least profitable regions.”
The cutback in stores will hit Southern California hard, with about 70 locations spread over the five-county area. The pending closures come as the retail sector continues to shift, with recent trends away from regional malls but relative strength among centers anchored by so-called “daily needs” tenants such as grocery stores and pharmacies.