What the changes say
- Advance Auto Parts completed major store closures under its 2024 Restructuring Plan while facing competitive store opening pressure.
- The company finalized a $31 million working capital adjustment related to the Worldpac divestiture.
- New global trade tariffs on imports from Canada, China, and Mexico threaten merchandise costs.
What changed since the prior 10-K
New
- NewRisks Related to the Company’s Operations and Strategy
The Company's ability to maintain its stores and open locations in desirable places will impact its competitive positioning and results of operations, and failure to properly invest in stores could adversely affect its business, financial condition, results of operations and cash flows
The company closed approximately 500 stores and 200 independent locations under the 2024 Restructuring Plan, but competitors are opening new stores at a faster pace.
- NewRisks Related to the Company’s Operations and Strategy
the Company’s ability to manage the expansion and to hire, train and retain qualified team members
Local land use, zoning regulations, and lease obligations create risks and potential costs when opening, relocating, or closing stores.
- NewRisks Related to the Company’s Operations and Strategy
Additionally, since the Company does not control its third-party service providers and its ability to monitor their data security is limited, the Company cannot ensure the security measures they take will be sufficient to protect the Company’s data
Limited control over third-party service providers and the adoption of artificial intelligence heighten cybersecurity risks and potential data breaches.
- NewRisks Related to the Company’s Operations and Strategy
Our significant level of indebtedness or a deterioration in the global credit markets could limit the cash flow available for operations and could adversely affect our ability to service our debt or obtain additional financing
A significant level of indebtedness could restrict operations, limit financing for working capital, and reduce cash flow available for business purposes.
- NewRisks Related to the Company’s Operations and Strategy
limit our ability to refinance our debt on terms as favorable as our existing debt or at all
Restrictive covenants in debt agreements could trigger an event of default if violated, and global credit market conditions may affect borrowing access and costs.
- NewRisks Related to the Company’s Common Stock and Financial Condition
make it more difficult for the Company to satisfy the Company’s financial obligations
Borrowings under the ABL Facility accrue interest at a floating rate tied to SOFR, and credit rating downgrades could increase interest expense.
Dropped
- DroppedRisks Related to the Company’s Operations and Strategy
our turnaround initiatives or impair the Company’s ability to maintain and enhance the Company’s internal controls and procedures
- DroppedRisks Related to the Company’s Operations and Strategy
If the Company is unable to keep its desired existing store locations or open new locations in desirable places on favorable terms, it could adversely affect its business, financial condition, results of operations and cash flows
Reworded
- 86% rewrittenRisks Related to the Company’s Operations and Strategy
Restructuring our operations is a significant undertaking and introduces risk to the continuity and results of the Company's operations
Updated to state that 2024 Restructuring Plan closures are complete, but additional restructuring charges of $30 million to $40 million are expected through fiscal 2026.
- 78% rewrittenRisks Related to the Company’s Operations and Strategy
An unstable global economic and geopolitical landscape increases uncertainty about key areas of doing business internationally and may have a negative impact on our business
Updated to reflect that new global trade tariffs were actually imposed during fiscal 2025 on imports from Canada, China, and Mexico, with reciprocal tariffs threatened.
- 72% rewrittenRisks Related to the Company’s Common Stock and Financial Condition
The Company’s level of indebtedness, a downgrade in the Company’s credit ratings or a deterioration in global credit markets could limit the cash flow available for operations and could adversely affect the Company’s ability to service its debt or obtain additional financing
Refined wording regarding the company's level of indebtedness and credit ratings limiting cash flow and debt service ability.
- 67% rewrittenRisks Related to the Company’s Operations and Strategy
We are exposed to risks associated with past and potential divestitures, which may impact our ability to fully realize the anticipated benefits of those transactions
Added a specific disclosure that the final net working capital adjustment for the Worldpac sale was $31 million in excess of preliminary estimates.
Was: We are exposed to risks associated with potential divestitures, which may impact our ability to fully realize the anticipated benefits of those transactions
- 53% rewrittenRisks Related to the Company’s Operations and Strategy
If we are unable to adequately design, implement, operate and maintain various information and technology systems, our ability to conduct business could be negatively impacted
Expanded technology risks to include replacing legacy systems with successor systems, cloud migration, and introducing artificial intelligence.
- 40% rewrittenRisks Related to the Company’s Operations and Strategy
Business interruptions may negatively impact the Company’s store hours, operability of our computer systems and the availability and cost of merchandise, which may adversely impact our sales and profitability
Added winter storms and potential repair costs to the list of natural disasters and business interruptions affecting stores and merchandise.
- 30% rewrittenRisks Related to the Company’s Operations and Strategy
If we are unable to successfully implement our business strategy, our business, financial condition, results of operations and cash flows could be adversely affected
Explicitly tied business strategy implementation risks to the 2024 Restructuring Plan and merchandising, supply chain, and store operations initiatives.
- 29% rewrittenRisks Related to the Company’s Common Stock and Financial Condition
The amount and frequency of the Company’s share repurchases and dividend payments may fluctuate
Replaced references to the old revolving credit facility with the ABL Facility regarding restrictions on dividends and share repurchases.
- 24% rewrittenRisks Related to the Company’s Operations and Strategy
The Company depends on the services of many qualified executives and team members, whom the Company may not be able to attract, develop and retain
Was: The Company depends on the services of many qualified executives and other team members, whom the Company may not be able to attract, develop and retain
All 26 risk factors
Headings as the filing states them, in filing order.
Risks Related to the Company’s Operations and Strategy
- 01If we are unable to successfully implement our business strategy, our business, financial condition, results of operations and cash flows could be adversely affected30% rewritten
- 02Restructuring our operations is a significant undertaking and introduces risk to the continuity and results of the Company's operations86% rewritten
- 03We are exposed to risks associated with past and potential divestitures, which may impact our ability to fully realize the anticipated benefits of those transactions67% rewritten
- 04If we are unable to adequately design, implement, operate and maintain various information and technology systems, our ability to conduct business could be negatively impacted53% rewritten
- 05An unstable global economic and geopolitical landscape increases uncertainty about key areas of doing business internationally and may have a negative impact on our business78% rewritten
- 06The Company’s reliance on suppliers, including freight carriers and other third parties in the Company’s global supply chain, subjects it to various risks and uncertainties which could adversely affect its financial results
- 07The Company's ability to maintain its stores and open locations in desirable places will impact its competitive positioning and results of operations, and failure to properly invest in stores could adversely affect its business, financial condition, results of operations and cash flowsNew
- 08the Company’s ability to manage the expansion and to hire, train and retain qualified team membersNew
- 09Omnichannel growth in the Company’s business is complex and if the Company is unable to successfully maintain a relevant omnichannel experience for its customers, its sales and results of operations could be adversely impacted
- 10The Company depends on the services of many qualified executives and team members, whom the Company may not be able to attract, develop and retain24% rewritten
- 11Additionally, since the Company does not control its third-party service providers and its ability to monitor their data security is limited, the Company cannot ensure the security measures they take will be sufficient to protect the Company’s dataNew
- 12If the Company is unable to successfully integrate future acquisitions into its existing operations or implement joint ventures or other strategic relationships, it could adversely affect the Company’s business, financial condition, results of operations and cash flows
- 13The Company is dependent on its suppliers to supply it with products that comply with safety and quality standards at competitive prices
- 14Because the Company is involved in litigation from time to time, and is subject to numerous laws and governmental regulations, the Company could incur substantial judgments, fines, legal fees and other costs
- 15Business interruptions may negatively impact the Company’s store hours, operability of our computer systems and the availability and cost of merchandise, which may adversely impact our sales and profitability40% rewritten
- 16In the event that commercial transportation, including the global shipping industry, is curtailed or substantially delayed, the business may be adversely impacted due to difficulty receiving merchandise from the Company’s suppliers and/or transporting it to the Company’s stores
- 17Our significant level of indebtedness or a deterioration in the global credit markets could limit the cash flow available for operations and could adversely affect our ability to service our debt or obtain additional financingNew
- 18limit our ability to refinance our debt on terms as favorable as our existing debt or at allNew
Risks Related to the Company’s Industry and the Business Environment
- 19If overall demand for the products that the Company sells declines, the Company’s business, financial condition, results of operations and cash flows will suffer. Decreased demand could also negatively impact the Company’s stock price
- 20The Company may be adversely affected by legal, regulatory or market responses regarding technological adaptation in the automotive industry
- 21If the Company is unable to compete successfully against other companies in the automotive aftermarket industry, the Company may lose customers and market share and the Company’s revenues may decline
- 22The Company’s inventory and ability to meet customer expectations may be adversely impacted by factors out of the Company’s control
Risks Related to the Company’s Common Stock and Financial Condition
- 23The Company’s level of indebtedness, a downgrade in the Company’s credit ratings or a deterioration in global credit markets could limit the cash flow available for operations and could adversely affect the Company’s ability to service its debt or obtain additional financing72% rewritten
- 24make it more difficult for the Company to satisfy the Company’s financial obligationsNew
- 25The market price of the Company’s common stock may be volatile and could expose us to securities class action litigation
- 26The amount and frequency of the Company’s share repurchases and dividend payments may fluctuate29% rewritten
Other Advance Auto Parts 10-Ks
- FY2024 10-K risk factors22 risks
Advance Auto Parts relies heavily on executing a major store restructuring and asset optimization plan in 2025. The company faces significant operational risks from recent divestitures like Worldpac and ongoing supply chain dependencies. Shifts in automotive technology and trade policy tariffs present material external threats.
Filed Feb 26, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.