GPC Reports 2023 Results, Announces Global Restructuring Program

[Counterman]

Genuine Parts Co. (GPC) reported full-year 2023 sales of $23.1 billion, a 4.5% year-over-year increase.

Net income was $1.3 billion, or $9.33 per diluted share, an increase of 12.3%.

Full-year net sales in the Automotive Parts Group, which includes NAPA Auto Parts, were $14.25 billion, up from $13.67 billion in 2022.

Fourth-quarter automotive sales were up nearly 1% to $3.5 billion.

While GPC’s international automotive businesses posted positive sales growth in local currency, the U.S. automotive segment saw a dip in sales, GPC President and COO Will Stengel noted during the company’s Feb. 15 conference call.

“In North America, while results fell short of our expectations, we remain focused on our strategic initiatives and continue to make solid progress,” GPC Chairman and CEO Paul Donahue said during the call. “We’ve undertaken a comprehensive review of the NAPA business to identify key issues, and we have taken action to improve the performance at NAPA. We are confident we are focused on the right initiatives to positively impact our performance in the quarters ahead.”

Coinciding with the release of its full-year and fourth-quarter 2023 financial results, GPC said the company is launching a global restructuring “to better align the company’s assets and further improve the efficiency of the business.”

The restructuring includes a voluntary retirement offer in the United States, along with “a rationalization and optimization of certain distribution centers, stores and other facilities,” according to the company.  

Through the restructuring, GPC said it expects to realize approximately $20 million to $40 million of savings in 2024, and approximately $45 million to $90 million on an annualized basis. The company also expects to incur costs of approximately $100 million to $200 million related to the restructuring efforts in 2024 and will report the restructuring costs as a non-recurring expense.

“The primary objective of the global program is to continue to simplify and streamline our operations consistent with our overall business strategy,” Stengel explained during the conference call. “When we simplify, we increase the speed of local service, deliver operational productivity, improve the efficiency of our teams and reduce our overall cost to serve.”

Stengel noted that the restructuring initiative “is a similar playbook to our previous GPC program implemented in fall 2019 that delivered positive results.”

“Aspects of the restructuring are already in flight, and some will take place in the months ahead,” Stengel added.

Focus on NAPA

Stengel talked at length about efforts to revitalize GPC’s NAPA Auto Parts business.

GPC has identified three areas of improvement for NAPA: improving fill rates in key product categories, “operational rigor in our stores” and capitalizing on commercial growth opportunities, Stengel explained.

Adjustments to “certain key suppliers to improve fill rates” boosted fourth-quarter “category trends,” Stengel said, adding that “we’re encouraged by the positive momentum.”

“Second, our in-store service levels measured by on-time delivery to customers have significantly improved as a result of increased focused on last-mile operating disciplines,” Stengel said.

Stengel noted that efforts to improve commercial sales growth are “ongoing.” GPC recently appointed Tom Skov to the newly created role of executive vice president, sales & store operations, North America.

“He’s an automotive-parts expert and has a deep understanding of our customers field sales and store operations,” Stengel asserted. “We’re excited for the strong leadership Tom will bring to our sales and store operations field teams.”

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