Advance Auto Parts layoffs (NYSE:AAP) are the talk of Wall Street lately after the retail chain announced it will eliminate roughly 400 positions at it’s third-quarter earnings report on Wednesday. Indeed, AAP stock is down about 7.5% at the time of writing as the formerly profitable car parts company struggles to reconcile falling revenue.
What do you need to know about Advance Auto Parts layoffs?
Well, as part of a new cost-cutting plan, the business plans to lay off hundreds of its employees, as well as sell off two of its business units. The changes come under the tutelage of recently appointed Chief Executive Shane O’Kelly.
At the company’s Q3 earnings call, Kelly offered shareholders some explanation of the company’s radical changes, as part of his “comprehensive review of the business.”
“We are taking decisive actions to position Advance for long-term success and create meaningful value for our shareholders. We are taking decisive actions to position Advance for long-term success and create meaningful value for our shareholders,” Kelly said.
The cost-cutting aspect of the company’s new strategy is expected to save $150 million annually. This includes the decision to initiate sale processes for Worldpac and its Canadian business.
Advanced Auto Layoffs Spook Investors
The car retailer’s changes come as a clear response to poor performance this year. Indeed, the company reported a earnings per share () loss of 82 cents in its fiscal third quarter, far below analysts’ expectations of a $1.42 EPS gain.
That said, the company did manage to slightly beat top line projections, posting revenue of $2.72 billion compared to $2.68 billion expected.
AAP stock has endured a miserable year so far. AAP is down 65% year-to-date, bringing its share price from around $150 per share in January, to its current $53 price tag.
Whether the company’s latest cost-cutting efforts will be enough to regain investor sentiment remains to be seen.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.