ROANOKE, Va. — Advance Auto Parts Inc. today announced that its board of directors has appointed President George Sherman to the additional role of interim CEO, effective Jan. 3, 2016, the beginning of the company’s next fiscal year.
Sherman will succeed Darren Jackson who will retire as CEO and step down from the board on Jan. 2, 2016, after more than 11 years with the company, including the last eight years as CEO.
The company also announced that effective immediately current Board Chairman John C. (“Jack”) Brouillard will become executive chairman. In this role, Brouillard will continue to provide board leadership and work closely in an advisory capacity with Sherman as the company continues to implement its long-term strategy.
The board also named Board Member John Ferraro to take on the role of lead independent director.
Brouillard said, “Since joining Advance Auto Parts nearly three years ago, George Sherman has demonstrated a range of important skills through his efforts to expand our Commercial business, improve operations and oversee the integration of General Parts. We are confident that George’s understanding of our business, strong customer relationships, and proven leadership abilities position him well to lead the Company through this transition period. As part of our search process, the Board will consider external candidates as well as George for the role of permanent CEO.”
Brouillard continued, “On behalf of the Board, I want to thank Darren Jackson for his extraordinary service to Advance Auto Parts. During his eight years as CEO, Advance has doubled in size while growing its market value over $10 billion and increasing its share price from $33 to $195. Darren’s leadership and commitment to excellence have transformed Advance into an industry leader that is well positioned strategically, operationally, and financially to capitalize on the opportunities that lie ahead.”
Sherman said, “I am honored to have the opportunity to lead Advance Auto Parts during this interim period. With increased scale and reach, including loyal do-it-yourself customers and an expanding presence in the fast-growing commercial segment, we are well positioned to drive growth and achieve our margin targets. I look forward to continuing to work closely with our talented executives and the thousands of hard-working Advance team members as we build value for our shareholders, customers and team.”
Jackson said, “It has been a privilege to lead this great company. Advance Auto Parts is well positioned to build upon its position as a leading automotive aftermarket parts provider, and I am confident George will successfully guide Advance during this interim period in continuing to implement its strategic plan.”
In others news, the company reported third-quarter earnings. Total sales for the third quarter increased 0.3 percent to $2.30 billion, as compared with total sales during the third quarter of fiscal 2014 of $2.29 billion. The sales increase was driven by the addition of new stores over the past 12 months and a comparable store sales increase of 0.5 percent partially offset by changes in the company’s independent store count. The company’s comparable store sales were negatively impacted by 47 basis points due to foreign currency fluctuations from our Canadian operations.
The company’s gross profit rate was 45.0 percent of sales during the third quarter as compared to 45.2 percent during the third quarter last year. The 20 basis-point decrease in gross profit rate was primarily the result of higher inventory expenses related to the product integration, modest supply chain expense deleverage due to low comparable store sales growth partially offset by lower product acquisition costs inclusive of the company’s ongoing merchandise synergy savings.
Advance also announced that it has entered into an agreement with Starboard Value LP and its affiliates, which has an ownership stake of approximately 3.7 percent of Advance Auto Parts’ shares, regarding the membership and composition of the Advance Auto Parts Board of Directors.
Under the terms of the agreement, Jeffrey C. Smith, Starboard’s CEO and chief investment officer, has been appointed to the Advance Auto Parts Board, effective immediately, and the size of the board has been expanded from 12 to 13 members.
Smith will serve as chair of the Nominating and Corporate Governance Committee and will also be a member of the Compensation and Finance Committees. In addition, Starboard will designate two independent directors to be added to the Advance Auto Parts Board as soon as practical. The company will name two additional independent directors designated by the Nominating and Corporate Governance Committee for election at the company’s 2016 annual meeting. It is expected that following the 2016 Annual Meeting the board will have 12 or 13 members.