Advance Auto Parts 2001 Annual Report Download - page 5

ADVANCE AUTO PARTS ANNUAL REPORT 2001 5
of the strongest and fastest growing DIY
markets in the country.
On April 23, 2001 Advance Auto Parts
acquired the assets of Carport Auto Parts,
Inc., a regional retailer with stores in
Alabama and Mississippi. Within three
months, our team had fully converted the
30 Carport stores into Advance Auto Parts
stores. From the date of their conversion at
the first of July until the end of the year, these
stores produced a 27 percent increase in sales.
We are pleased to welcome the
Discount Auto Parts and Carport Auto
Parts team members into our family. As
members of the same team, we will
continue to offer our customers the very
highest levels of service, quality, and value.
Our accomplishments for 2001 are just
the beginning. As we move into 2002, the
automotive aftermarket continues to show
prolonged strength as more miles are being
driven, vehicles are getting older and the
vehicle population is growing. With this
strength in our market, we are focused on
three key initiatives: expanding operating
margins, increasing our return on invested
capital and integrating Discount Auto Parts.
The integration of Discount Auto Parts
is on track. Our experienced acquisition
team is executing its proven integration
plan. And the Discount Auto Parts team
members are fully committed to making
the transformation a success.
The conversion of Discount Auto Parts
stores into the Advance Auto Parts store-
format should be completed by the end of
fiscal 2002 in markets where we already
have stores. The new Florida markets are
expected to have their inventory, supply
chain support and in-store systems
converted in 2002. These stores will be
converted to the Advance Auto Parts
format beginning in the fourth quarter of
2002 and continue market-by-market over
the next 3 years.
We are focusing on increasing the
profitability of our stores by taking the
following steps:
• Producing strong comparable
stores sales.
• Opening 100 to 125 new stores in
existing markets that meet our
increased after-tax return on
investment target.
• Continuing to develop and launch
exciting merchandising and
marketing initiatives, including the
full roll-out of category management.
• Enhancing the efficiency of our
supply chain.
• Rolling-out our proprietary state-
of-the-art electronic parts catalog to
all stores.
In summary, 2002 will be a year where
we will implement initiatives to serve our
customers better and focus on increasing
operating margins and return on invested
capital.
At this time, we would like to thank all
our customers for their business, our
stockholders for your support, and our
team members who continue to produce
strong results.
Jim Wade
President and Chief Financial Officer
Larry Castellani
Chief Executive Officer
4ADVANCE AUTO PARTS ANNUAL REPORT 2001
Our team members are on the front lines
every day implementing our formula for
success. This consists of the highest level of
customer service, a broad selection of
quality parts and products at value prices,
conveniently located stores, an efficient
supply chain and leading edge technology.
Working together, our team members
served well over 100 million satisfied
customers and produced strong financial
results during 2001.
These included:
• Growing comparable store sales 6.2
percent for the year on top of 4.4
percent in 2000.
• Generating total sales of more than
$2.5 billion, rising 10 percent.
• Expanding our operating margins 80
basis points for the year, before
one-time expenses, to 4.9 percent
from 4.1 percent last year.
• Achieving earnings per share of
$1.31, before one-time items,
compared to $0.58 the prior year,
an increase of 125.9 percent.
One of the most exciting events for all
of us at Advance Auto Parts took place on
November 29, 2001, when our common
stock began trading on the New York Stock
Exchange. Our Chairman of the Board,
Nick Taubman, placed the first trade as we
watched “AAP” cross the ticker tape for
the first time. At the end of that day, the
market value of the company was more
than $1.3 billion.
To enhance our already strong position
as the second-largest automotive retailer in
the United States, we completed two
acquisitions in 2001. The largest and most
strategic acquisition was completed on
November 28, 2001 when we acquired the
671-store Discount Auto Parts chain. These
stores, located in Florida, Georgia,
Louisiana, Mississippi, Alabama, and
South Carolina, reinforce our existing
network of stores in the Southeast. We now
have the leading market position, based on
store count, in the Southeast, which is one
It’s indeed a privilege to share our
first annual report as a public
company with you, our stockholders.
We truly believe that “The Best Part Is
Our People,” and you will see that
they have accomplished much on
your behalf this year.
Stockholders’ Letter
Jim Wade, President and Chief Financial Officer Larry Castellani, Chief Executive Officer