Advance Auto Parts, Inc. (AAP): Business Model Canvas [Dec-2025 Updated]

You're digging into Advance Auto Parts, Inc.'s (AAP) model, and the real story isn't just the 5,100+ stores; it's the strategic pivot toward the higher-margin Professional (Pro) customer segment. The company is defintely banking on supply chain efficiency and the strength of proprietary brands like DieHard to drive their projected 2025 Net Sales of around $11.3 billion (based on guidance). This isn't just about selling parts; it's about speed and expertise delivered through a dual-channel strategy, which is where the near-term risk and opportunity truly lie.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Key Partnerships

You need to know exactly who Advance Auto Parts relies on to keep their supply chain moving and their professional customers happy. Their key partnerships are a deliberate, two-pronged strategy: securing high-quality parts at the best cost and optimizing the logistics network to ensure speed, especially for their growing B2B (business-to-business) Pro segment.

The company's focus in 2025 is on reducing complexity and cost through strategic sourcing and a more efficient distribution footprint, which means their partner relationships are under intense scrutiny right now. Here's the quick math: fewer distribution centers, currently consolidating from 38 U.S. distribution centers to 16 by 2025, means they need rock-solid 3PL (third-party logistics) and technology partners to manage the increased volume and complexity in the remaining hubs.

Strategic sourcing with Tier 1 suppliers for key categories

Strategic sourcing means Advance Auto Parts is working directly with the largest, most reliable manufacturers (Tier 1 suppliers) to lock in better pricing, improve part quality, and ensure a steady supply of high-demand items. This is how they drive gross margin expansion, which hit an adjusted 43.8% of net sales in Q2 2025.

While the full list of these partners is proprietary, the goal is to leverage their scale to compete on cost. They are strategically securing supply for critical categories like brakes, filters, and chassis components. This is defintely a core part of their 'strategic sourcing to improve first costs' initiative.

Independent garage owners and repair shop networks (B2B)

The relationship with independent garages is a direct revenue driver, and it's where Advance Auto Parts is seeing growth. Their Pro business fueled their comparable store sales increase of 0.1% in the second quarter of 2025.

This partnership network extends beyond just the corporate stores. As of April 19, 2025, Advance Auto Parts served 881 independently owned Carquest branded stores across North America and the Caribbean. These independent partners act as an extended sales and distribution arm, especially in smaller or more remote markets where a corporate store might not be viable. They are essentially co-branding and co-locating their parts inventory and expertise.

Third-party logistics (3PL) providers for supply chain optimization

The company's supply chain is undergoing a major transformation, moving away from a decentralized model. The consolidation of distribution centers to 16 is a clear signal that they are leaning on sophisticated logistics partners to manage a higher-density, more complex network.

The new strategy involves expanding 'market hubs,' which are larger stores designed to serve as mini-distribution centers for surrounding locations. These hubs stock approximately 75,000 to 85,000 SKUs-a massive increase over a typical store's 20,000 to 25,000 SKUs-to support same-day delivery for their Pro customers.

Logistics Asset	2025 Strategic Metric	Impact on Partnership
Distribution Centers	Consolidating from 38 to 16	Requires 3PL partners to manage higher volume per center, increasing contract value and complexity.
Market Hub SKUs	Stocking 75,000 to 85,000 SKUs	Demands advanced inventory management and last-mile delivery partnerships for same-day service.
Supply Chain Financing	Utilizing a supply chain financing program	Involves banking partners to ensure vendors are paid quickly, maintaining strong supplier relationships.

Tech partners for e-commerce and inventory management systems

Technology partnerships are critical to achieving the projected $1.12 billion in online sales for 2025. The focus is on a seamless omnichannel experience, meaning the in-store and online systems must talk to each other perfectly. This is a massive undertaking that relies on enterprise software partners.

The mandate of the new Chief Technology Officer, hired in early 2025, is to modernize the supply chain and fulfillment infrastructure. This means deep partnerships with companies that provide:

• E-commerce platforms for seamless online ordering and VIN (Vehicle Identification Number) lookups.
• Warehouse Management Systems (WMS) to efficiently handle the 75,000+ SKUs in the new market hubs.
• Data and analytics platforms to enable data-driven personalization for Pro and DIY customers.

DieHard battery manufacturing partners

The DieHard brand, which Advance Auto Parts acquired in 2019 for $200 million, is a cornerstone of their owned-brand strategy. The manufacturing partnership for these batteries is with Clarios, a global leader in advanced battery solutions.

This partnership is a prime example of a strategic alliance that blends brand ownership with specialized manufacturing expertise. The collaboration has already yielded innovative products like the DieHard EV battery, which is designed specifically for hybrid and electric vehicles and offers 30 percent more cycling compared to standard AGM batteries.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Key Activities

Efficiently managing a complex, multi-echelon supply chain

This activity is currently undergoing a massive overhaul. You're not just moving parts; you're consolidating an inefficient, dual-legacy network into a unified, high-velocity system. The core action is reducing the number of large distribution centers (DCs) from a peak of 38 to a target of 14 replenishment DCs by the end of 2026. This consolidation is expected to improve your cost structure and inventory availability, which is defintely needed to drive the projected 2025 net sales guidance of $8.4 billion to $8.6 billion.

The new supply chain architecture relies heavily on a new layer of smaller, high-SKU facilities called 'market hubs' to get parts closer to the customer faster. The goal is to have 60 of these market hubs by mid-2027. Here's the quick math on the new inventory depth:

• Typical Store SKU Count: 20,000 to 25,000 SKUs
• Market Hub SKU Count: 75,000 to 85,000 SKUs
• Managed SKUs (New IMS): Over 300,000 SKUs

Selling parts to both DIY and professional customers

The key activity here is executing the 'blended-box' strategy-serving both the Do-It-Yourself (DIY) and the professional installer (Pro) customer segments from the same store footprint. Historically, sales have been split roughly 50/50 between these two channels. While the DIY segment has been under pressure, the Pro business has been the primary driver of recent growth.

You're working to capture additional wallet share in the Pro channel by improving delivery times by approximately 10 minutes compared to last year, which is a huge competitive lever. The strategic focus is on leveraging store density, with over 75% of your stores now in markets where Advance Auto Parts holds the No. 1 or No. 2 position.

Inventory management across ~5,100+ stores and distribution centers

Inventory management is a core activity, shifting from a historical sales-based model to one that anticipates regional demand, like stocking more truck parts in truck-heavy areas. This is critical for improving part availability, which directly impacts Pro customer satisfaction. The asset optimization program completed in mid-2025 involved closing 523 corporate stores and exiting 204 independent locations. This action reduced the total footprint but concentrated assets in core, high-density markets.

As of late 2025, your operational footprint is being actively reshaped:

Asset Type	Status (Late 2025)	Key Metric
Corporate Stores	Operating/Targeted	Approximately 4,788 stores (as of Dec 2024, pre-2025 new openings)
Independently Owned Carquest Stores	Served	934 locations
Market Hubs	In Operation	Expected to end 2025 with 33 locations
New Store Openings (2025)	Planned/Opened	30 new locations in the U.S.

Accelerating the Market Hub and Assortment Rollout

To be fair, the activity of 'Running the Worldpac professional parts distribution network' is no longer a Key Activity for Advance Auto Parts, Inc., as the company completed the sale of Worldpac for $1.5 billion in November 2024. So, the new focus is on accelerating the in-house Pro-customer service model.

The new, critical activity is the rapid deployment of the new assortment framework (the products you stock) across your best markets. This framework is expected to be rolled out in the top 50 Designated Market Areas (DMAs) by the end of 2025. This action is estimated to have already delivered an uplift of nearly 50 basis points in comparable sales growth in the initial markets, which is a strong proof point.

Training store teams on technical product knowledge

This is a non-negotiable activity for a blended-box model, especially to serve the Pro customer who demands deep expertise. You are investing in additional training for team members to enhance the customer experience, which is part of the broader effort to standardize the store operating model. The company is leveraging technology, including a new learning management system, to expand its automotive training programs. This focus on upskilling is essential for improving labor productivity and ensuring that team members can accurately advise on the over 300,000 SKUs now managed by the new IMS.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Key Resources

The key resources for Advance Auto Parts, Inc. are primarily physical and intellectual assets that support its core strategy of serving both professional (Pro) and do-it-yourself (DIY) customers. This resource base is currently undergoing a strategic refinement following the sale of non-core assets to sharpen the focus on the blended box model.

Extensive store network of over 5,100 locations (US, Canada, Puerto Rico)

The company's most visible and critical physical asset is its vast retail and distribution footprint. As of July 12, 2025, Advance Auto Parts, Inc. operated 4,292 corporate stores and serviced an additional 842 independently owned Carquest branded stores, totaling 5,134 physical locations across the United States, Canada, Puerto Rico, and the U.S. Virgin Islands. This widespread network is what allows for rapid parts delivery to the Pro customer and convenient access for the DIY shopper.

The focus is on optimizing this network, including the consolidation of U.S. distribution centers from 38 to 16 by the end of 2025, aiming for better inventory flow and faster service. That's a massive logistical shift.

Physical Asset Category	Count (as of Q2 2025)	Geographic Reach
Corporate Stores (Advance Auto Parts)	4,292	US, Canada, Puerto Rico, US Virgin Islands
Independent Stores (Carquest Brand)	842	US, Canada, Puerto Rico, Mexico, Caribbean
Total Locations	5,134	North America and Caribbean

Access to a Vast Import and Specialty Parts Catalog

While Advance Auto Parts, Inc. sold the Worldpac distribution business to Carlyle for $1.5 billion in late 2024, the ability to supply a deep catalog of import and specialty parts remains a key resource for the Pro business. The strategic shift is to simplify the enterprise structure, but the company must still ensure its core 'blended box' stores can access the breadth of parts required by professional installers.

The former Worldpac business, which generated approximately $2.1 billion in revenue in the 12 months leading up to the sale, was a major source of this expertise. The challenge now is to maintain that specialty parts availability through streamlined supplier relationships and the remaining Carquest network to serve the complex needs of modern vehicle repair.

DieHard brand equity, a recognized consumer asset

The DieHard brand is a powerful intellectual asset, acquired by Advance Auto Parts, Inc. for $200 million in 2019. It's a classic American brand with high consumer awareness, particularly in the battery category.

This brand equity is a key differentiator, helping to drive traffic from DIY customers who trust the name. The brand is now extended across multiple performance tiers, including the high-end DieHard Platinum AGM batteries, which support the complex electrical demands of newer vehicles with start-stop technology.

• Acquisition Cost: $200 million (2019).
• Strategic Value: High consumer trust and brand recognition, especially in the battery category.
• Product Range: Includes DieHard Platinum, Gold, Silver, and Red tiers, catering to a diverse range of vehicle needs.

Proprietary IT systems for inventory and pricing

The company's IT infrastructure is a crucial resource for managing the complexity of its inventory and supply chain. In July 2024, Advance Auto Parts, Inc. implemented a new inventory management system designed to optimize the flow of over 300,000 SKUs (Stock Keeping Units) across its network. This is defintely a work in progress.

The goal of these proprietary systems is to improve inventory productivity, capture demand signals faster, and ensure accurate parts availability-all critical for competing on service speed in the Pro market. Here's the quick math: managing 5,134 locations and 300,000+ SKUs requires highly sophisticated, proprietary software to execute the hub-and-spoke distribution model efficiently.

A dedicated workforce of over 68,000 team members

Human capital is essential for delivering the high-touch service required by the Pro customer and the advice needed by the DIY customer. The company relies on a large team of approximately 69,000 employees (comprising roughly 40,000 full-time and 29,000 part-time team members, based on 2024 figures) to operate its stores and distribution centers. The expertise of these team members in diagnostics, parts lookup, and customer service is a non-replicable asset.

The ongoing strategic plan includes a focus on the standardization of the store operating model, which is heavily reliant on training and retaining this large, dedicated workforce to consistently execute the 'blended box' strategy.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Value Propositions

You're not just selling parts; you're selling uptime for a professional garage and confidence for a do-it-yourself (DIY) mechanic. Advance Auto Parts' core value proposition in late 2025 is a sharp focus on the Professional (Pro) business, stabilizing the DIY segment, and using supply chain improvements to deliver on speed and availability. The company is guiding for full-year 2025 net sales between $8.4 billion and $8.6 billion, with the Pro channel driving the positive comparable sales growth, so the value proposition must directly serve that segment's need for speed and accuracy.

Availability: Right part, right time, especially for professional customers

For the professional installer, the right part at the right time is money. Advance Auto Parts is directly addressing this with a significant inventory overhaul, which is a big deal. They've added more than 60,000 new SKUs (Stock Keeping Units) year-to-date in 2025, which is an increase of nearly 300% compared to the prior year, showing an intense push to close assortment gaps.

This inventory expansion is supported by the Market Hub store strategy, which is the backbone of their availability promise. These larger stores carry a massive selection, helping to service the local network of traditional stores.

• Market Hub Stores: Stock 75,000 to 85,000 SKUs.
• Typical Stores: Carry 20,000 to 25,000 SKUs.
• Assortment Rollout: Completing the new assortment framework in the top 50 DMAs (Designated Market Areas) by the end of 2025.

Here's the quick math: a Market Hub has about three to four times the parts of a regular store, meaning a Pro customer is far more likely to get their specialized or import part immediately. What this estimate hides is the complexity of managing 90 million unique store SKU combinations across the network, but the focus is clearly on getting the part to the shop faster.

Speed: Same-day or next-day delivery to repair shops

The entire supply chain transformation is geared toward one thing for the Pro customer: reducing the wait time. The company has consolidated 38 U.S. distribution centers down to a target of 16 by 2025, which is a huge operational undertaking, but it's necessary to streamline logistics.

The most concrete result of this push is the measurable improvement in delivery service. They've reported a reduction in delivery time by approximately 10 minutes compared to the previous year, which directly impacts a repair shop's labor efficiency. This focus is paying off, with the store availability KPI (Key Performance Indicator) now in the mid-90s range, a gain of about 100 basis points from Q1 2025.

Selection: Broad coverage from basic maintenance to specialty import parts

Advance Auto Parts offers a comprehensive parts portfolio that spans both national and private label brands, ensuring they cover the full spectrum of vehicle repair needs. The strategy is to offer a blended-box model that serves both the domestic and import vehicle markets.

Their selection covers everything from routine maintenance like oil and filters to complex components like engines, clutches, and climate control parts.

Product Category	Value to Customer	Example Parts
Core Repair Parts	Reliability for critical jobs	Brakes, Chassis, Starters & Alternators
Maintenance Fluids	Full-service capability for Pro shops	Motor oil, Transmission fluid, Antifreeze
Specialty SKUs	Availability for import/complex repairs	Expansion of 60,000+ new SKUs (2025 YTD)

Trust: Quality parts like the DieHard battery line

The DieHard brand is a major value anchor, providing a premium, trusted product that both Pro and DIY customers recognize. It's America's most trusted auto battery, and Advance Auto Parts leverages this brand equity heavily.

For the Pro customer, the DieHard Assurance program is a critical value-add, offering peace of mind that goes beyond the product itself.

• Warranty: 24-month/24,000-mile coverage on professionally installed batteries.
• Roadside Assistance: Reimbursement up to $125.
• Trip Interruption: Coverage up to $250 for eligible meal and lodging expenses.
• Technology: DieHard Platinum AGM batteries are engineered for up to 2X the lifespan of standard flooded batteries.

Expertise: In-store advice for the do-it-yourself (DIY) mechanic

While the Pro business is the growth driver, the DIY customer relies on the store team for guidance. Advance Auto Parts is backing this up with tangible investment in their people and stores. They are providing additional training to team members to boost product knowledge and enhance the overall customer experience.

They are also investing about three times more on maintenance capital expenditure in 2025 year-to-date compared to 2024, with major upgrades at more than 1,000 stores to improve the in-store experience. This investment shows they defintely understand that a clean, well-stocked store with knowledgeable staff is a key differentiator for the DIY segment.

The expertise value is delivered through practical, no-cost services:

• Free battery testing and recycling.
• Free wiper installation.
• Free engine light scanning and checking.
• A loaner tool program.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Customer Relationships

You're looking at Advance Auto Parts, Inc.'s (AAP) customer relationships, and the quick takeaway is that they run a dual-track approach: high-touch, dedicated service for the professional (Pro) installer, and a highly automated, rewards-driven relationship for the Do-It-Yourself (DIY) customer. This split is critical since Pro sales represented about 50% of total sales in 2024, meaning half of their projected $8.4 billion to $8.6 billion net sales for fiscal year 2025 comes from these complex, relationship-based accounts.

The company focuses on retention and growth in the Pro segment, which is currently driving performance, evidenced by the 0.1% comparable store sales increase in Q2 2025 being fueled by the Pro business.

Dedicated Pro Sales Team for commercial accounts (high-touch)

The relationship with professional repair shops is high-touch and consultative, managed through the Advance Professional platform. This isn't just a transaction; it's a partnership where Advance Auto Parts embeds itself into the shop's daily operations. They offer more than just parts; they offer solutions to help the shop run better. This focus has resulted in a strong performance, including 8 consecutive weeks of US Pro comparable sales growth reported in the first quarter of 2025.

The Pro relationship is supported by a suite of services, not just a sales representative. This dedicated support structure is what keeps the high-volume commercial accounts locked in. Honestly, professional installers need speed and reliability more than anything else.

Relationship Type	Customer Segment	Key Value Proposition
Dedicated Pro Sales Team	Professional Installers (Shops, Garages)	High-touch account management, dedicated delivery, and technical support programs like TechNet.
Self-Service/Loyalty Program	Do-It-Yourself (DIY) Customers	Rewards (Speed Perks), online ordering, and in-store parts look-up assistance.

Self-service e-commerce platforms for both segments

Advance Auto Parts runs e-commerce platforms for both DIY and Pro customers, blending the digital and physical experience. The primary online channel, advanceautoparts.com, generated US$433 million in annual sales in 2024, which is a significant, though still small, portion of total revenue.

For the Pro segment, the self-service relationship is facilitated through a dedicated Pro App and online ordering tools. This allows busy shop owners to order parts outside of business hours, which is a defintely necessary convenience. E-commerce sales are included in the comparable store sales calculation, confirming their role as an integrated sales channel.

Loyalty programs like Speed Perks for DIY customers

The core relationship mechanism for the DIY customer is the tiered Speed Perks loyalty program. This program is designed to drive repeat purchases and increase the customer's lifetime value by offering escalating rewards based on annual spend. The last widely publicized membership number was over 11 million members and counting.

The tiered structure encourages customers to spend more to unlock better benefits, a classic retention strategy.

• Club Level: Spend up to $200 per year; earn 10 points per dollar spent.
• VIP Level: Spend between $200 and $500 per year; earn 11 points per dollar spent, and points carry over.
• Elite Level: Spend $500 or more per year; earn 12.5 points per dollar spent, get priority customer service, and points never expire.

Technical support and training for professional repair shops

To retain the Pro customer, Advance Auto Parts provides extensive, value-added services that go far beyond just selling parts. This is a crucial relationship builder, making the company a partner in the shop's success, not just a vendor. These programs are housed under the Advance Professional banner and include technical and business support.

• TechNet Professional: A network of more than 15,000 independent repair shops that provides a minimum 24-month/24,000-mile nationwide warranty and roadside assistance to their customers, backed by Advance Auto Parts.
• CTI + WTI: Provides industry-leading technical and business management training for technicians and shop managers.
• MotoLogic: Gives technicians access to unedited OEM service information and wiring diagrams for accurate diagnostics.
• MotoVisuals: A library of over 400 3D service and repair animations used by shops to explain complex repair recommendations to vehicle owners, increasing transparency and close rates.

In-store consultation and parts look-up assistance

The physical store network, which included 4,285 stores as of April 19, 2025, remains a vital point of customer interaction and service. For the DIY customer, this is often a personal assistance model where store team members help with parts look-up, diagnostics, and advice, like identifying the correct part from a wide inventory of over 900,000 products.

This in-store service is a key differentiator against purely online competitors. The ability to walk in and get an immediate, expert recommendation can make or break a DIY project, plus, the stores serve as pick-up points for online orders, tying the digital and physical experience together for both customer types.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Channels

You're looking at how Advance Auto Parts gets its product into the hands of both the do-it-yourself (DIY) customer and the professional installer (PRO), and honestly, it's a story of a major shift back to core strengths. The channel strategy for late 2025 is all about optimizing the physical footprint and leveraging that network for rapid, localized delivery, especially after divesting a major wholesale arm.

The company's focus is now clearly on a blended-box model-using the store as a hub for both retail and commercial fulfillment. This is where the capital is going, so we need to track the performance of these integrated channels closely.

Physical Stores: Over 5,700 Locations for Immediate Pick-up

The core channel remains the physical store network, which is undergoing a strategic optimization to ensure market density. As of late 2025, Advance Auto Parts operates a combined network of over 5,700 total locations. This includes approximately 4,818 corporate-owned stores (up from 4,788 at the end of 2024, based on plans to open 30 new locations in 2025) and an additional 934 independently owned Carquest branded stores across North America and the Caribbean.

The strategy is simple: put a store close to the customer. More than 75% of the company's stores are now situated in markets where Advance Auto Parts holds the number one or number two position in store density. This proximity is the bedrock of their speed-of-service promise.

Mobile Delivery Fleet: Direct Delivery to Professional Garages

The mobile delivery fleet is not a separate channel, but a critical service layer built on top of the store network, specifically targeting the higher-margin PRO customer. This channel is being dramatically enhanced through the expansion of larger-format 'market hubs.'

These market hubs are essentially super-stores that function as local distribution centers. A typical Advance Auto Parts store carries 20,000 to 25,000 stock-keeping units (SKUs), but a market hub stocks between 75,000 to 85,000 SKUs. This massive increase in local inventory is what powers the same-day delivery service to professional garages, a non-negotiable expectation in the PRO segment. The company is on a path to have 60 new market hubs by mid-2027, with new openings underway in the Midwest and other key regions in 2025.

E-commerce: AdvanceAutoParts.com

The primary digital channel is the owned e-commerce site, AdvanceAutoParts.com, which serves the DIY customer for both ship-to-home and the popular Buy Online, Pick Up In Store (BOPIS) options. The e-commerce channel is integrated into the comparable store sales metric, highlighting its role as an extension of the physical store channel.

For the 2025 fiscal year, the company is focused on stabilizing this channel after a period of transformation. Here's the quick math on the digital scale:

E-commerce Metric	Value (Fiscal Year 2024)	Notes for 2025
Annual Online Sales (advanceautoparts.com)	Approximately $433 million	Projected to be flat or slightly down in 2025, indicating a focus on store-based fulfillment.
Comparable Store Sales (Q2 2025)	Increased 0.1%	This figure includes e-commerce sales fulfilled from stores, showing a slight stabilization in the overall sales trend.
Conversion Rate (2024 Estimate)	1.5% to 2.0%	A key performance indicator (KPI) for the efficiency of the online channel.

The real opportunity here is using the website for parts look-up and order placement, then fulfilling that order from the nearest physical location. That's how you defintely beat the pure-play online competitors on speed for the urgent repair.

Worldpac: Dedicated B2B Distribution Network

This channel is no longer a part of Advance Auto Parts' core business model in late 2025. The company announced the sale of the Worldpac wholesale parts distribution business to Carlyle for $1.5 billion in cash, with the transaction expected to close before the end of 2024. Worldpac's financial results, which included approximately $2.1 billion in revenue in the 12 months through June 2024, are now reported as discontinued operations in the 2025 financial statements.

The sale allows Advance Auto Parts to simplify its channel focus and direct its capital and management attention squarely on the 'blended box' model-the integration of the Advance Auto Parts and Carquest stores serving both DIY and PRO customers.

Third-Party Marketplaces (Limited Scope)

While the overall auto parts e-commerce aftermarket is a huge business, with third-party (3P) marketplaces playing a significant role, Advance Auto Parts' channel strategy is heavily weighted toward its owned platforms and physical stores. The strategic focus is on controlling the customer experience and inventory flow through AdvanceAutoParts.com and the store network. The lack of material public data on their 3P marketplace sales suggests this remains a limited-scope channel, prioritizing direct control over broader market reach through external platforms.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Customer Segments

You're looking at Advance Auto Parts, Inc. (AAP) and their customers, and the core takeaway is simple: the business is built on a 'blended-box' model, serving two distinct, equally critical groups-the professional mechanic and the individual car owner. The company's strategic focus in 2025 is on strengthening the Professional side, which is showing real momentum, while stabilizing the Do-It-Yourself segment after a period of restructuring.

The company is projecting full-year 2025 Net Sales from continuing operations to be in the range of $8.4 billion to $8.6 billion, and this revenue is fundamentally split between these two major customer segments. The success of the current turnaround plan hinges on meeting the specialized needs of each group, not just selling parts. That's the quick math.

Do-It-Yourself (DIY) Customers: Individual consumers repairing their own vehicles

This segment represents the individual consumer who buys parts for their own vehicle maintenance or repair. Historically, DIY has made up approximately 50% of the company's total sales, which, based on the midpoint of the 2025 net sales guidance, translates to an estimated annual revenue of around $4.25 billion.

These customers prioritize convenience, in-store product availability, and accessible guidance. They are often less brand-loyal than Pro customers and are highly sensitive to price and promotional offers. The DIY segment showed 'early signs of stabilization' in the second quarter of 2025, but it remains a work in progress for the company.

• Seek convenience and easy access to products.
• Value online resources like installation guides and video tutorials.
• Purchasing behavior is often driven by immediate, non-deferrable repair needs.

Professional (Pro) Customers: Independent garages, dealerships, and service chains

The Professional segment, often called the 'Pro' or 'Do-It-For-Me' (DIFM) business, includes independent repair shops, national service chains, and new car dealerships. This segment has also historically represented approximately 50% of total sales, equating to an estimated $4.25 billion in annual revenue for 2025.

Pro customers are the backbone of the company's growth strategy right now. They demand quality, a broad product assortment, and, crucially, rapid, reliable delivery to minimize vehicle downtime. This focus is paying off: the U.S. Pro business delivered eight consecutive weeks of comparable sales growth as of the first quarter of 2025, a key positive indicator of the company's turnaround efforts.

• Prioritize speed of delivery and product availability for same-day service.
• Benefit from contractual agreements and bulk purchasing power.
• Require a broad range of high-quality, professional-grade parts.

Fleet Operators: Businesses maintaining their own vehicle fleets

Fleet operators are a critical, high-value sub-segment within the broader Professional customer base. These are businesses-ranging from local delivery services to utility companies-that maintain their own large vehicle fleets, requiring a steady, predictable supply of maintenance and repair parts.

Their needs are distinct: they require volume pricing, centralized billing, and specialized commercial programs. Their purchasing decisions are driven by total cost of ownership (TCO) and minimizing vehicle out-of-service time. The company serves this segment through its Pro sales channel, leveraging its supply chain optimization plan, which aims to consolidate distribution centers to 16 by 2025 to improve delivery times and product availability.

Value-Conscious Shoppers: Seeking competitive pricing and promotions

This is a psychographic profile that cuts across both the DIY and Pro segments, but is most pronounced in the DIY space, especially with current macroeconomic headwinds. These customers are actively seeking the best price, utilizing promotions, loyalty programs, and comparing prices across multiple retailers, including non-traditional competitors like Amazon and eBay.

The company addresses this segment through strategic pricing and its loyalty program, Speed Perks, which is essential for retaining the price-sensitive DIY customer. The challenge here is maintaining competitive pricing while improving the adjusted gross margin, which was 43.8% of net sales in Q2 2025.

Customer Segment	Primary Focus	Estimated 2025 Net Sales Contribution (Approx.)	Key 2025 Trend
Professional (Pro)	Repair Shops, Dealers, Fleets (B2B)	$4.25 billion (50% of sales)	Strong comparable sales growth (8 consecutive weeks in Q1 2025)
Do-It-Yourself (DIY)	Individual Car Owners (B2C)	$4.25 billion (50% of sales)	Early signs of stabilization in Q2 2025

Finance: draft a detailed margin analysis comparing the Pro and DIY segments by the end of the month. You defintely need to see where the real profitability lies.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Cost Structure

You are looking at Advance Auto Parts, Inc.'s cost structure right now because you know that a successful turnaround hinges on cost discipline, not just revenue growth. The company's cost base is defintely high-volume, low-margin retail, dominated by inventory costs and a massive physical footprint, but the current focus is on optimizing that footprint to drive efficiency.

The strategic store closures and supply chain shifts in 2024 have created short-term noise-like liquidation costs-but the long-term goal is a leaner, more profitable operating model. Here's the breakdown of where every dollar goes in late 2025.

Cost of Goods Sold (COGS): Primary cost, managing inventory and supplier costs

The Cost of Goods Sold (COGS) is, predictably, the single largest expense, representing the direct cost of parts and accessories sold. In the second quarter of 2025, Advance Auto Parts, Inc.'s GAAP Gross Profit was $0.9 billion on net sales of $2.0 billion, which means COGS consumed about 56.5% of net sales.

For the full fiscal year 2025, with net sales guidance between $8.4 billion and $8.6 billion, you can project COGS to be in the range of $4.75 billion to $4.87 billion, assuming a stable gross margin.

The pressure here is twofold: global supply chain costs (tariffs are still a threat) and the need for strategic sourcing to improve first costs. The company is working to manage this through:

• Improving inventory management systems.
• Leveraging new distribution centers for better scale.
• Mitigating product cost inflation.

Store Operating Expenses: Rent, utilities, and labor for 5,100+ locations

Store Operating Expenses are bundled primarily into Selling, General, and Administrative (SG&A) costs. This is the second major cost center, covering everything from store rent and utilities to local marketing. The company's footprint as of April 2025 included 4,285 Advance stores plus 881 independently owned Carquest branded stores, totaling over 5,100 locations.

In the second quarter of 2025, Adjusted SG&A expenses were $0.8 billion, or 40.7% of net sales. The good news is that the company saw a reduction in SG&A year-over-year, which management attributes to operating fewer stores following the 2024 optimization plan.

Here's the quick math: keeping SG&A below 41% of sales is critical for hitting the full-year adjusted operating income margin target of 2.0% to 3.0%.

Logistics and Distribution: Significant investment in supply chain and delivery

Logistics costs are a major area of investment and a key driver of competitive advantage. The company is actively reshaping its supply network to speed up delivery, especially to its professional (Pro) customers.

This is a big capital expenditure push, focusing on two things:

• Opening 30 new U.S. stores in 2025, with a focus on larger 'market hubs.'
• Establishing 10 new market hubs in 2025, which are essentially regional distribution centers.

These market hubs are designed to carry a much larger inventory-up to 85,000 SKUs-closer to the customer base, which helps with same-day delivery and reduces expensive emergency transfers between stores.

Personnel Costs: Wages for over 68,000 employees

Personnel costs, mainly wages and benefits for store and distribution center staff, are a substantial fixed cost within SG&A. The company reports having approximately 62,800 total employees as of late 2025, a number that has been adjusted downward due to the store optimization plan.

Labor expenses are a key drag on profitability, but the company is trying to offset rising wages by improving operational efficiency at the store level. A big part of the 2025 strategy involves additional training for associates to enhance the customer experience, which is an investment that must pay off in higher sales to justify the cost.

Technology and E-commerce Infrastructure

Investment in technology is a non-negotiable cost for any retailer right now, and Advance Auto Parts, Inc. is no exception. The company is spending about three times more on maintenance capital expenditure in 2025 compared to 2024.

This increased spending is directly allocated to major upgrades at more than 1,000 stores, focusing on IT infrastructure, new equipment, and systems that improve inventory and delivery accuracy. The goal is simple: a better digital experience for the DIY customer and a faster, more reliable service for the Pro installer.

Here is a summary of the core cost components and their impact on the 2025 financial picture:

Cost Component	2025 Financial Impact/Metric	Strategic Context
Cost of Goods Sold (COGS)	Approx. 56.5% of Net Sales (Q2 2025)	Largest cost; focus on strategic sourcing and inventory optimization.
Store Operating Expenses (SG&A)	Adjusted 40.7% of Net Sales (Q2 2025)	Second largest cost; reduction due to 2024 store closure program.
Store Footprint	4,285 Advance Stores + 881 Carquest stores (April 2025)	Shifting from optimization to growth with 30 new stores planned in 2025.
Logistics Investment	Opening 10 Market Hubs in 2025	Market Hubs carry 75,000 to 85,000 SKUs to enable same-day delivery.
Technology/Capex	3x increase in maintenance capex vs. 2024	Upgrading IT infrastructure and equipment in over 1,000 stores.

Advance Auto Parts, Inc. (AAP) - Canvas Business Model: Revenue Streams

The core of Advance Auto Parts, Inc.'s revenue model is a balanced, blended-box approach, drawing nearly equal sales from its two primary customer segments: the professional installer and the do-it-yourself (DIY) customer. For the full fiscal year 2025, the company projects Net Sales from continuing operations to be in the range of $8.4 billion to $8.6 billion, which is a key metric to track as the company executes its turnaround strategy.

To be clear, while some prior projections may have targeted higher figures, the current, narrowed guidance for 2025 is firmly between $8.4 billion and $8.6 billion. Here's the quick math on the year so far: Net Sales totaled approximately $6.6 billion through the first three quarters of 2025 (Q1: $2.6 billion, Q2: $2.0 billion, Q3: $2.0 billion).

Sales to Professional Customers (Pro) - a key growth driver

The Pro segment, which includes garages, service stations, and auto dealerships, is a critical revenue pillar and the primary focus for comparable sales growth. Historically, sales to professional customers have represented approximately 50% of the company's total sales. This segment is served through a dedicated delivery program, offering quick access to parts-a vital service for commercial repair shops. The company's comparable sales performance in the second quarter of 2025 was specifically noted as being fueled by growth in the Pro business.

Sales to DIY Customers (Retail)

The DIY segment, consisting of individual consumers buying parts for their own vehicle repairs, generates the other half of the revenue, also historically around 50% of total sales. These customers are primarily served through the physical retail store footprint, which, as of July 2025, consisted of 4,292 stores in the United States, Canada, Puerto Rico, and the U.S. Virgin Islands. The DIY business showed early signs of stabilization in the second quarter of 2025, which is defintely a positive sign after earlier declines.

E-commerce sales across both segments

E-commerce is not a separate revenue stream but a vital channel for both Pro and DIY customers. The company includes e-commerce sales in its calculation of comparable store sales, demonstrating its integration into the core business model. This channel supports both in-store pickup and direct shipping, offering convenience that captures the modern consumer's wallet share.

Revenue from proprietary brands like DieHard and Carquest

A significant portion of revenue comes from the sale of owned brand automotive replacement parts, accessories, batteries, and maintenance items, which generally carry higher margins. Advance Auto Parts, Inc. leverages powerful proprietary names like DieHard (batteries) and Carquest (parts) to drive sales across both customer segments. The Carquest brand is particularly important in the Pro channel, as the company also serves 842 independently owned Carquest branded stores, generating revenue through distribution center shipments to these locations.

Projected 2025 Net Sales around $8.5 billion (based on guidance)

The company's net sales are a direct reflection of its strategic focus on the blended-box model following the divestiture of its Worldpac business in late 2024. The revenue is recognized primarily at the point of sale. The key revenue components for the 2025 fiscal year are summarized below:

Revenue Stream Component	2025 Full-Year Guidance/Estimate	Q1-Q3 2025 Actual Net Sales
Total Net Sales (Continuing Operations)	$8.4 billion to $8.6 billion	Approximately $6.6 billion
Professional (Pro) Sales Mix (Estimate)	~50% of Total Net Sales	Growth driver for comparable sales
DIY (Retail) Sales Mix (Estimate)	~50% of Total Net Sales	Showing early signs of stabilization
Comparable Store Sales Growth (Guidance)	0.5% to 1.5%	Q2 2025: 0.1% increase

The company's revenue streams are generated through a mix of transactional sales and service-related activities:

• Direct sales of parts and accessories to Pro customers via delivery.
• Retail sales of parts, batteries, and accessories to DIY customers in stores.
• E-commerce sales for both segments, including buy online, pick up in-store.
• Wholesale revenue from shipments to independently owned Carquest stores.
• Sales of high-margin owned brands like DieHard and Carquest.

The company is aiming for an adjusted operating margin of 2.0% to 3.0% for the full year 2025, showing that the revenue generation is tied closely to improved cost management and operational efficiency. Finance: draft a sensitivity analysis on the Pro/DIY mix to see the impact of a 5% shift in either direction by Friday.