ADVANCE AUTO PARTS INC (Form: 10-Q, Received: 11/05/2026 16:03:25)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 10, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission file number 001-16797

ADVANCE AUTO PARTS, INC.

(Exact name of registrant as specified in its charter)


Delaware	54-2049910
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4200 Six Forks Road, Raleigh, North Carolina 27609

(Address of principal executive offices) (Zip Code)

(540) 362-4911

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	AAP	New York Stock Exchange

Not Applicable

(Former name, former address and former fiscal year, if changed since last report).

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 2, 2026, the number of shares of the registrant’s common stock outstanding was 60.4 million shares.

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TABLE OF CONTENTS


			Page
NOTE REGARDING FORWARD LOOKING STATEMENTS			1
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries (unaudited)	2
		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
		Condensed Consolidated Statements of Cash Flows	7
		Notes to the Condensed Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 5.	Other Information	26
	Item 6.	Exhibits	27
SIGNATURE			28

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FORWARD-LOOKING STATEMENTS

Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast," “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, future business and financial performance, revenue, earnings, cash flow, liquidity, restructuring and asset optimization plans, financial objectives, debt capital structure, operational plans and objectives, capital expenditures, organizational changes, cost reductions, expectations for macroeconomic conditions, marketing strategies, inflation, impairments, consumer behavior and preferences, labor costs and availability, supply chain and merchandising strategies and effects, technology investments, effective tax rates, regulatory changes and impacts, anticipated impacts of tariffs and other trade barriers, tariff refunds, compliance with debt covenants, statements about the status of, and capacity and utilization under, the Company’s supply chain financing arrangements and statements about the Company’s future credit ratings and outlook as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, risks relating to incurrence of indebtedness and increased leverage, risks relating to the Company's credit ratings or perceived creditworthiness, the Company's ability to complete store openings, deterioration of general macroeconomic conditions, geopolitical factors, including tariffs, petroleum supply and prices, and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain, implementation and operation of information and technology systems and innovative technologies, and challenges with transforming and growing its business. Please refer to "Item 1A. Risk Factors" of the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as updated by the Company's subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.

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PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in millions, except par value amounts) (Unaudited)


Assets	October 10, 2026			January 3, 2026
Current assets:
Cash and cash equivalents	$	3,085		$	3,123
Receivables, net		404			380
Inventories, net		3,789			3,646
Other current assets		128			141
Total current assets		7,406			7,290
Property and equipment, net		1,285			1,269
Operating lease right-of-use assets		2,100			2,157
Goodwill		599			600
Other intangible assets, net		398			400
Other assets		133			110
Total assets	$	11,921		$	11,826
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	3,065		$	2,977
Accrued expenses		714			756
Current portion of long-term debt		349			—
Other current liabilities		416			443
Total current liabilities		4,544			4,176
Long-term debt		3,039			3,412
Operating lease liabilities		1,795			1,812
Deferred income taxes		179			142
Other long-term liabilities		104			86
Total liabilities		9,661			9,628

Commitments and contingencies (Note 9)

Stockholders' equity:
Preferred stock, nonvoting, $0.0001 par value, 10 million shares authorized; no shares issued or outstanding		—			—
Common stock, voting, and additional paid-in capital, $0.0001 par value, 200 million shares authorized; 79 million shares issued and 60 million outstanding at October 10, 2026 and 78 million shares issued and 60 million outstanding at January 3, 2026		1,064			1,033
Treasury stock, at cost		(2,954	)		(2,944	)
Accumulated other comprehensive loss		(44	)		(37	)
Retained earnings		4,194			4,146
Total stockholders' equity		2,260			2,198
Total liabilities and stockholders' equity	$	11,921		$	11,826

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in millions, except per share data) (Unaudited)


	Twelve Weeks Ended						Forty Weeks Ended
	October 10, 2026			October 4, 2025			October 10, 2026			October 4, 2025
Net sales	$	2,012		$	2,036		$	6,626		$	6,628
Cost of sales		1,115			1,155			3,625			3,764
Gross profit		897			881			3,001			2,864
Selling, general and administrative expenses, exclusive of restructuring expenses		808			826			2,699			2,771
Restructuring and related expenses		42			33			84			180
Selling, general and administrative expenses		850			859			2,783			2,951
Operating income (loss)		47			22			218			(87	)
Other, net:
Interest expense		(46	)		(40	)		(160	)		(86	)
Other income, net		23			16			76			61
Total other, net		(23	)		(24	)		(84	)		(25	)
Income (loss) before income tax expense		24			(2	)		134			(112	)
Income tax expense (benefit)		9			(1	)		40			(150	)
Net income (loss)	$	15		$	(1	)	$	94		$	38

Basic earnings (loss) per common share	$	0.25		$	(0.02	)	$	1.56		$	0.63
Basic weighted-average common shares outstanding		60.4			60.0			60.3			59.9

Diluted earnings (loss) per common share	$	0.25		$	(0.02	)	$	1.54		$	0.63
Diluted weighted-average common shares outstanding		60.9			60.0			60.9			60.5

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(in millions) (Unaudited)


	Twelve Weeks Ended						Forty Weeks Ended
	October 10, 2026			October 4, 2025			October 10, 2026			October 4, 2025
Net income (loss)	$	15		$	(1	)	$	94		$	38
Other comprehensive (loss) income:
Currency translation adjustments		(4	)		(1	)		(7	)		5
Total other comprehensive (loss) income		(4	)		(1	)		(7	)		5
Comprehensive income (loss)	$	11		$	(2	)	$	87		$	43

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in millions, except per share data) (Unaudited)


	Twelve Weeks Ended October 10, 2026

	Common Stock and				Treasury			Accumulated Other						Total
	Additional Paid-in Capital				Stock, at			Comprehensive			Retained			Stockholders'
	Shares		Amount		cost			Loss			Earnings			Equity
Balance at July 18, 2026		60	$	1,055	$	(2,953	)	$	(40	)	$	4,195		$	2,257
Net income		—		—		—			—			15			15
Total other comprehensive loss		—		—		—			(4	)		—			(4	)
Share-based compensation		—		8		—			—			—			8
Common stock issued under employee benefit plans		—		1		—			—			—			1
Repurchase of common stock		—		—		(1	)		—			—			(1	)
Dividends declared ($0.25 per common share)		—		—		—			—			(16	)		(16	)
Balance at October 10, 2026		60	$	1,064	$	(2,954	)	$	(44	)	$	4,194		$	2,260


	Twelve Weeks Ended October 4, 2025

	Common Stock and				Treasury			Accumulated Other						Total
	Additional Paid-in Capital				Stock, at			Comprehensive			Retained			Stockholders'
	Shares		Amount		cost			Loss			Earnings			Equity
Balance at July 12, 2025		60	$	1,016	$	(2,943	)	$	(41	)	$	4,171		$	2,203
Net loss		—		—		—			—			(1	)		(1	)
Total other comprehensive loss		—		—		—			(1	)		—			(1	)
Share-based compensation		—		9		—			—			—			9
Common stock issued under employee benefit plans		—		1		—			—			—			1
Repurchase of common stock		—		—		(1	)		—			—			(1	)
Dividends declared ($0.25 per common share)		—		—		—			—			(15	)		(15	)
Balance at October 4, 2025		60	$	1,026	$	(2,944	)	$	(42	)	$	4,155		$	2,195

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(in millions, except per share data) (Unaudited)


	Forty Weeks Ended October 10, 2026

	Common Stock and				Treasury			Accumulated Other						Total
	Additional Paid-in Capital				Stock, at			Comprehensive			Retained			Stockholders'
	Shares		Amount		cost			Loss			Earnings			Equity
Balance at January 3, 2026		60	$	1,033	$	(2,944	)	$	(37	)	$	4,146		$	2,198
Net income		—		—		—			—			94			94
Total other comprehensive loss		—		—		—			(7	)		—			(7	)
Share-based compensation		—		29		—			—			—			29
Common stock issued under employee benefit plans		—		2		—			—			—			2
Repurchase of common stock		—		—		(10	)		—			—			(10	)
Dividends declared ($0.75 per common share)		—		—		—			—			(46	)		(46	)
Balance at October 10, 2026		60	$	1,064	$	(2,954	)	$	(44	)	$	4,194		$	2,260


	Forty Weeks Ended October 4, 2025

	Common Stock and				Treasury			Accumulated Other						Total
	Additional Paid-in Capital				Stock, at			Comprehensive			Retained			Stockholders'
	Shares		Amount		cost			Loss			Earnings			Equity
Balance at December 28, 2024		60	$	994	$	(2,940	)	$	(47	)	$	4,163		$	2,170
Net income		—		—		—			—			38			38
Total other comprehensive income		—		—		—			5			—			5
Share-based compensation		—		29		—			—			—			29
Common stock issued under employee benefit plans		—		3		—			—			—			3
Repurchase of common stock		—		—		(4	)		—			—			(4	)
Dividends declared ($0.75 per common share)		—		—		—			—			(46	)		(46	)
Balance at October 4, 2025		60	$	1,026	$	(2,944	)	$	(42	)	$	4,155		$	2,195

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in millions) (Unaudited)


	Forty Weeks Ended
	October 10, 2026			October 4, 2025
Cash flows from operating activities:
Net income	$	94		$	38
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		188			214
Share-based compensation		29			29
Loss on sale and impairment of long-lived assets		41			23
Expected future credit losses, net		12			50
Provision for deferred income taxes		38			(27	)
Other, net		22			14
Net change in:
Receivables, net		(36	)		46
Inventories, net		(152	)		(75	)
Operating lease right-of-use assets		19			41
Other assets		(15	)		(57	)
Accounts payable		94			(270	)
Accrued expenses		14			(37	)
Operating lease liabilities		(56	)		(108	)
Other liabilities		19			1
Net cash provided by (used in) operating activities		311			(118	)
Cash flows from investing activities:
Purchases of property and equipment		(202	)		(159	)
Proceeds from sales of property and equipment		2			22
Other, net		(9	)		—
Net cash used in investing activities of continuing operations		(209	)		(137	)
Net cash used in investing activities of discontinued operations		(55	)		—
Net cash used in investing activities		(264	)		(137	)
Cash flows from financing activities:
Dividends paid		(45	)		(45	)
Repayment of long-term debt		(29	)		(300	)
Proceeds from issuance of long-term debt		—			1,950
Debt issuance costs		—			(42	)
Other, net		(8	)		(4	)
Net cash (used in) provided by financing activities		(82	)		1,559

Effect of exchange rate changes on cash		(3	)		1

Net (decrease) increase in cash and cash equivalents		(38	)		1,305
Cash and cash equivalents, beginning of period		3,123			1,869
Cash and cash equivalents, end of period	$	3,085		$	3,174

Non-cash transactions:
Accrued purchases of property and equipment	$	19		$	23
Accrued dividends		16			16
Accrued debt issuance costs		—			4

Supplemental cash flow information:
Interest paid	$	189		$	65

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Nature of Operations and Basis of Presentation

Description of Business

Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both professional installers (“professional”) and “do-it-yourself” (“DIY”) customers. The accompanying unaudited condensed consolidated financial statements include the accounts of Advance Auto Parts, Inc., its wholly owned subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and their subsidiaries (collectively referred to as “the Company”).

As of October 10, 2026, the Company operated a total of 4,325 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of October 10, 2026, the Company served 787 independently owned Carquest branded stores across the same geographic locations served by the Company’s stores, in addition to various locations in the Caribbean islands. The Company’s stores operate primarily under the trade names “Advance Auto Parts” and “Carquest”.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and unaudited notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted based upon the SEC interim reporting principles.

The accompanying condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The accounting policies followed in the presentation of these condensed consolidated financial statements are consistent with those followed on an annual basis.

These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for fiscal year 2025 (“2025 Form 10-K”) as filed with the SEC on February 13, 2026. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with prior years, the Company’s first quarter of the year contained sixteen weeks. The Company’s remaining quarters each consist of twelve weeks.

The forty weeks ended October 10, 2026 included a payment to settle the customary final working capital amounts related to the Company's sale of Worldpac, which was reflected as a cash outflow for discontinued operations on the condensed consolidated statements of cash flows. The charge was recorded in the fourth quarter of fiscal 2025 and reflects a working capital adjustment recognized as an adjustment to the original estimated purchase price and a reduction in the gain on divestiture recorded as a component of discontinued operations in fiscal 2025 and 2024.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Recently Issued Accounting Pronouncements - Adopted

Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which makes targeted improvements to the accounting for internal-use software by removing references to “development stages”. The update also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-06 can be applied prospectively, retrospectively, or via a modified prospective transition method. The Company adopted ASU 2025-06 on a prospective basis as of the beginning of fiscal 2026 for all projects, including in-process projects. The adoption did not have a material impact on the condensed consolidated financial statements and related disclosures.

Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company adopted ASU 2025-05 on a prospective basis as of the beginning of fiscal 2026. The adoption did not have a material impact on the condensed consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements - Not Yet Adopted

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation (“ASU 2024-03”), which requires public entities to disclose more detailed information about certain costs and expenses presented in the income statement, including (among other items) the amount of inventory purchases, employee compensation, selling expenses and depreciation and amortization of intangible assets. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group:


	Twelve Weeks Ended						Forty Weeks Ended
	October 10, 2026			October 4, 2025			October 10, 2026			October 4, 2025
Percentage of Net Sales:
Parts and Batteries		64	%		65	%		64	%		63	%
Accessories and Chemicals		20	%		20	%		21	%		22	%
Engine Maintenance		15	%		14	%		14	%		14	%
Other		1	%		1	%		1	%		1	%
Total		100	%		100	%		100	%		100	%

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

There were no major customers individually accounting for 10% or more of consolidated net revenues.

Inventories, net

The Company used the last in, first out (“LIFO”) method of accounting for approximately 92% of inventories as of October 10, 2026 and January 3, 2026. An actual valuation of inventory under the LIFO method is performed at the end of each fiscal year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on the Company’s estimates of expected inventory levels and costs at the end of the year. The Company’s LIFO credit reserve balance was $133 million and $104 million as of October 10, 2026 and January 3, 2026, respectively, to state inventories at LIFO. Increases to the Company’s LIFO credit reserve balance are recorded as a non-cash charge to cost of sales and decreases are recorded as a non-cash benefit to cost of sales.

The non-cash expense recorded to cost of sales related to the change in the LIFO credit reserve for the periods presented was as follows:


	Twelve Weeks Ended				Forty Weeks Ended
	October 10, 2026		October 4, 2025		October 10, 2026		October 4, 2025
LIFO credit reserve expense	$	11	$	33	$	29	$	37

Purchasing and warehousing costs included in inventories as of October 10, 2026 and January 3, 2026 were $441 million and $426 million, respectively.

Receivables, net

Receivables, net, consisted of the following:


	October 10, 2026			January 3, 2026
Trade	$	413		$	370
Vendor		56			87
Other		16			18
Total receivables		485			475
Less: allowance for credit losses		(81	)		(95	)
Receivables, net	$	404		$	380

Changes in the allowance for expected credit losses were as follows:


Allowance for credit losses	October 10, 2026
Balance at beginning of period	$	95
Additions		25
Write offs		(39	)
Balance at end of period	$	81

The Company regularly reviews accounts receivable, vendor and other balances and maintains allowances for credit losses estimated whenever events or circumstances indicate the carrying value may not be recoverable and updates its estimate of credit losses each reporting period based on new information that becomes available. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. The Company controls credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

In the third quarter of fiscal 2025, one of the Company’s vendors, a leading auto parts supplier for the automotive aftermarket industry, filed voluntary petitions for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of Texas. On September 1, 2026, the bankruptcy cases were converted to Chapter 7 liquidation. As a result of these events, the Company recorded a non-cash charge of $28 million to cost of sales in the third quarter of fiscal 2025, within the condensed consolidated statement of operations, reflecting estimated future credit losses on certain vendor receivables due from the vendor.

On February 20, 2026, the U.S. Supreme Court overturned certain U.S. tariffs imposed under the International Emergency Economic Powers Act ("IEEPA"). During fiscal 2025, the Company incurred product costs directly related to the IEEPA tariffs. Tariffs directly paid by the Company are subject to direct refund via the IEEPA tariff refund process. Given the significant uncertainty around the recovery of tariffs that were previously paid, the Company recognizes IEEPA tariff refunds if and when received. In the second fiscal quarter of 2026, the Company recognized $26 million in IEEPA tariff refunds, recorded as a benefit to cost of sales on the condensed consolidated statement of operations. Subsequent to the second quarter of fiscal 2026, the Company has recognized an immaterial amount of IEEPA refunds. The Company will continue to assess the recoverability of these tariffs, and will recognize any future recoveries when realized or realizable, the magnitude of which in future periods is not expected to be material to the Company's condensed consolidated financial statements.

Long-term Debt and Fair Value of Financial Instruments

Long-term Debt

During the second quarter of fiscal 2026, the Company entered into a Rule 10b5-1 Repurchase Plan (the "Repurchase Plan") to effect repurchases of outstanding principal amounts of the Company's 1.75% Senior Unsecured Notes due October 1, 2027 (the "2027 Notes") and the 5.95% Senior Unsecured Notes due March 9, 2028 (the "2028 Notes"), subject to certain price and market conditions. During the second quarter ended July 18, 2026, the Company repurchased an aggregate $0.1 million and $29 million of outstanding principal related to the 2027 Notes and 2028 Notes under the Repurchase Plan, respectively, which was reflected in the carrying value of long-term debt on the condensed consolidated balance sheets. The plan was terminated upon completion of the repurchases. No new plans were entered into during the third quarter of fiscal 2026. During the third quarter ended October 10, 2026, the Company reclassified $349 million of long-term debt to current liabilities related to the 1.75% Senior Unsecured Notes due October 1, 2027.

Fair Value of Financial Assets and Liabilities

As of October 10, 2026 and January 3, 2026, the fair value of the Company’s long-term debt, which includes the current portion of long-term debt, was approximately $3.3 billion and $3.4 billion, respectively. The fair value of the Company’s long-term debt was determined using Level 2 inputs based on quoted market prices. The carrying amounts of the Company’s cash and cash equivalents, receivables, net, accounts payable and accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.

Credit Facilities

As of October 10, 2026 and January 3, 2026, the Company had no outstanding borrowings under its asset-based loan revolving credit facility (the "ABL Facility"). As of October 10, 2026 and January 3, 2026 the Company had $894 million and $896 million of borrowing availability, respectively, and $106 million and $104 million letters of credit outstanding, respectively, under the ABL Facility.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts (as defined in the ABL Facility). As of October 10, 2026 and January 3, 2026, $2.3 billion was designated as Qualified Cash. These amounts are unrestricted and the Company is able to direct, and have sole control over, the manner of disposition of funds in such accounts, subject to: 1) maintaining a minimum availability under the ABL Facility of at least the greater of (i) 12.5% of the Line Cap (as defined in the ABL Facility) and (ii) $125 million; and 2) maintaining excess availability under the ABL Facility of at least $400 million. The Qualified Cash Accounts are subject to springing control agreements pursuant to which the cash deposited therein will become restricted in the event of default or a breach of such covenants. The Company was in compliance with its covenants related to the ABL Facility in all periods presented.

Debt Guarantees

The Company is a guarantor of loans made by banks to various independently-owned Carquest-branded stores that are or, prior to the Company’s restructuring and asset optimization plan approved in November 2024 ("2024 Restructuring Plan"), were customers of the Company, totaling $57 million and $69 million as of October 10, 2026 and January 3, 2026, respectively. This obligation represents a financial guarantee with two aspects: a contingent liability accounted for under ASC 326 related to our contingent obligation to purchase loans, and a non-contingent liability accounted for under ASC 460, Guarantees, related to our obligation to stand-ready to perform under the obligation. The Company continuously assesses the likelihood of performance under these guarantees and records liabilities established related to these financial guarantees within other current liabilities in the condensed consolidated balance sheets. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements was $142 million and $152 million as of October 10, 2026 and January 3, 2026, respectively.

Leases

Substantially all of the Company’s leases are for facilities, vehicles, and equipment. The initial term for facilities is typically five to ten years, with renewal options typically at five-year intervals, with the exercise of lease renewal options at the Company’s sole discretion. The Company’s vehicle and equipment lease terms are typically three to six years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Total lease cost is included in cost of sales and total selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income.

Total lease costs are comprised of the following:


	Twelve Weeks Ended				Forty Weeks Ended
	October 10, 2026		October 4, 2025		October 10, 2026		October 4, 2025
Operating lease cost	$	110	$	107	$	368	$	391
Variable lease cost		33		34		114		123
Total lease cost	$	143	$	141	$	482	$	514

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Other information relating to the Company’s lease liabilities was as follows:


	Forty Weeks Ended
	October 10, 2026		October 4, 2025
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	412	$	458
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	294	$	284

Earnings per Share

The computations of basic and diluted earnings per share were as follows:


	Twelve Weeks Ended					Forty Weeks Ended
	October 10, 2026		October 4, 2025			October 10, 2026		October 4, 2025
Numerator
Net income (loss)	$	15	$	(1	)	$	94	$	38

Denominator
Basic weighted average common shares		60.4		60.0			60.3		59.9
Dilutive impact of share-based awards		0.5		—			0.6		0.6
Diluted weighted average common shares(1)		60.9		60.0			60.9		60.5

Basic earnings (loss) per share	$	0.25	$	(0.02	)	$	1.56	$	0.63

Diluted earnings (loss) per share	$	0.25	$	(0.02	)	$	1.54	$	0.63

(1)

For the twelve weeks ended October 10, 2026 and October 4, 2025, 0.4 million and 1.4 million, respectively, of share-based awards were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the forty weeks ended October 10, 2026 and October 4, 2025, 0.5 million and 0.8 million respectively, of share-based awards were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Supplier Finance Programs

Certain of the Company’s suppliers enter into agreements with third-party financial institutions to obtain enhanced receivables options. These arrangements are commonly referred to and known in the industry as supply chain financing programs. Through these agreements, the Company’s suppliers, at their sole discretion, may elect to sell their receivables due from the Company to the third-party financial institutions at terms negotiated between the supplier and the third-party financial institutions. The Company’s obligations to suppliers, including amounts due and scheduled payment terms, are not impacted, and no assets are pledged under the agreements. All outstanding amounts due to third-party financial institutions related to suppliers participating in such financing arrangements are recorded within accounts payable and represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in the Company’s condensed consolidated balance sheets. As of October 10, 2026, and January 3, 2026, the confirmed obligations outstanding under these supplier finance programs to third-party financial institutions were $2.6 billion and $2.5 billion, respectively.

Commitments and Contingencies

Currently and from time to time, the Company is subject to litigation, claims and other disputes, including legal and regulatory proceedings, arising in the normal course of business. The Company records a loss contingency liability when a loss is considered probable and the amount can be reasonably estimated. Although the final outcome of pending legal matters cannot be determined, based on the facts presently known, it is management’s opinion that the final outcome of any pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

10.

Segment Reporting

The Company conducts its operations principally in the geographical areas of the U.S. and Canada through its Advance Auto Parts and Carquest trade brands. The products sold by the Company, across all geographic areas, have similar economic characteristics, are sourced from the Company’s suppliers in a similar manner, and are available for sale to all of the Company’s customers through the Company’s stores and self-service e-commerce sites. All of the Company’s stores have similar characteristics, including the nature of the products and services, the type and class of customers, and the methods used to distribute products and provide service to its customers. Due to these reasons, the Company has one operating segment, referred to as Advance Auto Parts/Carquest and one reportable segment. As geographic information is not a key component of how the chief operating decision maker (“CODM”) reviews performance and allocates resources, such entity-wide information is not disclosed on a quarterly basis.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

The Company’s CODM is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. Discrete information is not regularly provided to and/or reviewed by the Company’s CODM at a lower level than the consolidated level, inclusive of segment asset level detail. The CODM primarily focuses on net income to evaluate its reportable segment. The CODM also uses net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees. Significant segment expenses regularly provided to the CODM, which represent the difference between segment revenue and segment net income, consisted of the following:


	Twelve Weeks Ended						Forty Weeks Ended
	October 10, 2026			October 4, 2025			October 10, 2026			October 4, 2025
Net sales	$	2,012		$	2,036		$	6,626		$	6,628
Less:
Cost of sales		1,115			1,155			3,625			3,764
Selling, general and administrative expenses(1)		763			774			2,552			2,616
Restructuring and related expenses		42			33			84			180
Depreciation and amortization expense(2)		45			52			147			155
Interest expense		46			40			160			86
Other segment items(3)		(23	)		(16	)		(76	)		(61	)
Income tax expense (benefit)		9			(1	)		40			(150	)
Net income (loss)	$	15		$	(1	)	$	94		$	38

(1)

Selling, general and administrative expenses, excludes restructuring and related expenses and depreciation and amortization.

(2)

Excludes depreciation and amortization included in restructuring and related expenses and cost of sales, respectively.

(3)

Other segment items relates primarily to interest income and, in fiscal 2025, income recognized from the transition services agreement with Worldpac that commenced in the fourth quarter of fiscal 2024, included in total other, net, in the accompanying condensed consolidated statements of operations.

11.

Restructuring

2024 Restructuring Plan

On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan, a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. This plan contemplated the closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions. The Company completed the closure of all of these locations during the first quarter of 2025.

Expenses associated with the 2024 Restructuring Plan included: (1) write down of inventory to net realizable value due to liquidation sales as a result of store closures and streamlining assortment associated with the 2024 Restructuring Plan, (2) non-cash asset impairment and accelerated amortization and depreciation of operating lease right-of-use (“ROU”) assets and property and equipment, (3) personnel expenses related to severance and transition expenses, which were offered to certain employees who would provide services through key dates to ensure completion of closure activities and (4) other location closure-related activity, including nonrecurring services rendered by third-party vendors assisting with the turnaround initiatives and other related expenses, including incremental revisions to receivable collectability due to termination of contracts with independents associated with the 2024 Restructuring Plan.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Other Restructuring Initiatives

In November 2023, the Company announced a strategic and operational plan with anticipated savings of $150 million of which $50 million would be reinvested into frontline team members. In addition to a reduction in workforce, this plan streamlines the Company’s supply chain by configuring a multi-echelon supply chain by leveraging current assets and operating fewer, more productive distribution centers that focus on replenishment and move more parts closer to the customer. In achieving this plan, the Company is in process of converting certain distribution centers and stores into market hubs. In addition to providing replenishment to near-by stores, market hubs support retail operations. In addition to the distribution network optimization costs, other restructuring expenses include certain other items as further detailed in the table below. The Company continues to incur charges associated with this plan and expects to incur additional charges through the end of fiscal 2026, primarily consisting of conversion costs associated with the conversion of certain distribution centers and severance and other personnel expenses.

The Company has recorded all restructuring and related expenses as a component of selling, general and administrative expenses in the condensed consolidated statement of operations, with the exception of inventory related expenses that are recorded as a component of cost of sales in the condensed consolidated statement of operations.

Restructuring and related expenses for the periods presented was as follows:


	Twelve Weeks Ended				Forty Weeks Ended
2024 Restructuring Plan Expenses:	October 10, 2026		October 4, 2025		October 10, 2026			October 4, 2025
Cost of sales:
Inventory (recovery) write-down	$	—	$	—	$	(6	)	$	—
Selling, general and administrative expenses:
Impairment and write-down of long-lived assets		26		15		34			67
Severance and other personnel expenses		—		—		—			15
Other location closure related expenses(1)		1		7		16			63
2024 Restructuring Plan Expenses	$	27	$	22	$	44		$	145

Other Restructuring Plan Expenses:
Cost of sales expenses:
Distribution network optimization	$	2	$	4	$	7		$	9
Selling, general and administrative expenses:
Distribution network optimization		3		6		8			15
Impairment and write-down of long-lived assets		12		3		19			9
Worldpac post transaction-related expenses		—		2		—			7
Other restructuring expenses(2)		—		—		7			4
Other Restructuring Plan Expenses	$	17	$	15	$	41		$	44

(1)

Other location closure related activity for the twelve weeks ended October 10, 2026 consists of other related expenses associated with location closures, including the transfer of assets, and for the forty weeks ended October 10, 2026 includes $13 million for reserves on independent loans and the remaining amount relates to other related expenses associated with location closures, including the transfer of assets. Other location closure related activity for the twelve and forty weeks ended October 4, 2025 includes $2 million and $37 million, respectively, of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan. The forty weeks ended October 4, 2025 also includes $7 million for reserves on independent loans. The remaining other related expenses are associated with location closures, including the transfer of assets.

(2)

Other restructuring expenses primarily consists of nonrecurring services rendered by third-party vendors, severance and other personnel expenses.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in millions, except per share data, unless otherwise stated)

(Unaudited)

Impairments and write-down of long-lived assets primarily relate to impairments recorded on ROU assets for Stores and Distribution Center locations impacted through the Company’s restructuring plans. Management continually assesses market conditions and assumptions for indicators of impairment related to the fair value of closed stores and distribution centers that are currently available for sublease. During the third quarter of fiscal 2026, management concluded that changes in market conditions and key assumptions related to certain closed locations had occurred, as they had not yet been subleased consistent with the Company’s expected use of the locations. These factors represented a triggering event requiring the Company to reassess the recoverability and measurement of certain asset groups, primarily consisting of ROU assets, that were previously impacted by the announced restructuring and distribution network optimization plans. As a result of the reassessment performed, the Company updated its estimates of future sublease income and other key assumptions using currently available market data (including market rents, broker indications, expected vacancy periods, and discounts to market rent based on remaining lease term) and recorded a non-cash impairment charge of $33 million related to ROU assets in the third quarter of fiscal 2026.

Restructuring liabilities were immaterial as of October 10, 2026 and January 3, 2026.

As of October 10, 2026, the cumulative amount incurred to date under active restructuring plans totaled $1.1 billion, consisting of write-down of inventory to net realizable value, lease termination impacts, other exit-related expenses related to ceased use buildings, professional service fees and certain employee termination benefits. Substantially all of the costs under the restructuring plans have been incurred as of October 10, 2026. The Company estimates that it will incur additional expenses of approximately $5 million to $10 million under active restructuring plans through fiscal 2026.

12.

Income Taxes

The Company’s effective tax rate for the forty weeks ended October 10, 2026 was higher than the estimated annual effective tax rate, primarily due to a discrete charge for stock-based compensation and return-to-provision adjustments related to the filing of prior-year tax returns. The Company's effective tax rate for the forty weeks ended October 4, 2025 was lower than the estimated annual effective tax rate, primarily due to a net discrete tax benefit of $126 million realized in the first quarter of fiscal 2025 related to certain tax benefits associated with capital loss deductions.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026 (filed with the SEC on February 13, 2026) which the Company refers to as the “2025 Form 10-K”, and the Company’s unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with the previous fiscal year, the Company’s first quarter of the year contained sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.

Third Quarter Fiscal 2026 Management Overview

The Company’s financial results for the third quarter of 2026 include:

•

Net sales during the third quarter of fiscal 2026 were $2.0 billion, a decrease of 1.2% compared with the third quarter of fiscal 2025. Comparable store sales decreased by 1.2%.

•

Gross profit margin for the third quarter of fiscal 2026 was 44.6% of net sales, an increase of 131 basis points compared with the third quarter of fiscal 2025.

•

Selling, general and administrative ("SG&A") expenses, exclusive of restructuring and related expenses for the third quarter of fiscal 2026, were 40.2% of net sales, a decrease of 41 basis points compared with the third quarter of fiscal 2025.

•

The Company generated diluted earnings per share of $0.25 during the third quarter of fiscal 2026, compared with diluted loss per share of $0.02 for the comparable period of 2025.

Business and Risks Update

The Company continues to make progress on the various elements of its business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers.

During the second quarter of fiscal 2026, the Company entered into a Rule 10b5-1 Repurchase Plan (the "Repurchase Plan") to effect repurchases of outstanding principal amounts of the Company's outstanding 1.75% Senior Unsecured Notes due October 1, 2027 (the "2027 Notes") and the 5.95% Senior Unsecured Notes due March 9, 2028 (the "2028 Notes"), subject to certain price and market conditions. During the second quarter ended July 18, 2026, the Company repurchased an aggregate $0.1 million and $29 million of outstanding principal related to the 2027 Notes and 2028 Notes under the Repurchase Plan, respectively, which was reflected in the carrying value of long-term debt on the condensed consolidated balance sheets. The plan was terminated upon completion of the repurchases. No such plans were entered into during the third quarter of fiscal 2026.

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The ongoing geopolitical events in the Middle East have continued to cause significant disruption in the normal flow of oil, refined petroleum products and related commodities, which has increased the variability of the price of oil and non-petroleum products. Although the length and impact of these events are highly unpredictable, they could lead to market disruptions, including significant volatility in prices, supply, credit and capital markets, consumer behavior and supply chain disruptions. These items, along with actual or perceived weakness in the economic and business climate, could have an adverse impact on our financial condition and results of operations in future periods.

Industry Update

Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. In addition to the “Business and Risk Update” section included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, these factors include, but are not limited to:

•

Significant changes in U.S trade policies, including the global trade tariffs

•

Inflationary pressures, including logistics and labor

•

Global supply chain disruptions

•

Cost of fuel

•

Changes in the number of miles driven

•

Unemployment rates

•

Interest rates

•

Consumer confidence and purchasing power

•

Competition

•

Changes in new car sales

•

Economic and geopolitical uncertainty

•

Foreign currency exchange volatility

While these factors tend to fluctuate, the Company remains confident in the long-term growth prospects for the automotive parts industry.

Stores

The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the forty weeks ended October 10, 2026, twenty-six stores were opened and six stores were closed, resulting in a total of 4,325 stores as of the end of the third fiscal quarter compared with a total of 4,305 stores as of January 3, 2026.

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Results of Operations


	Twelve Weeks Ended
($ in millions)	October 10, 2026					October 4, 2025					Change(1)			Basis Points
Net sales	$	2,012		100.0	%	$	2,036		100.0	%	$	(24	)		—
Cost of sales		1,115		55.4			1,155		56.7			40			(131	)
Gross profit		897		44.6			881		43.3			16			131
Selling, general and administrative expenses, exclusive of restructuring and related expenses		808		40.2			826		40.6			18			(41	)
Restructuring and related expenses		42		2.1			33		1.6			(9	)		47
Selling, general and administrative expenses		850		42.2			859		42.2			9			6
Operating income		47		2.3			22		1.1			25			126
Interest expense		(46	)	(2.3	)		(40	)	(2.0	)		(6	)		(32	)
Other income, net		23		1.1			16		0.8			7			36
Income tax expense (benefit)		9		0.4			(1	)	—			(10	)		50
Net income (loss)	$	15		0.7	%	$	(1	)	—	%	$	16			79


	Forty Weeks Ended
($ in millions)	October 10, 2026					October 4, 2025					Change(1)			Basis Points
Net sales	$	6,626		100.0	%	$	6,628		100.0	%	$	(2	)		—
Cost of sales		3,625		54.7			3,764		56.8			139			(208	)
Gross profit		3,001		45.3			2,864		43.2			137			208
Selling, general and administrative expenses, exclusive of restructuring and related expenses		2,699		40.7			2,771		41.8			72			(107	)
Restructuring and related expenses		84		1.3			180		2.7			96			(145	)
Selling, general and administrative expenses		2,783		42.0			2,951		44.5			168			(252	)
Operating income (loss)		218		3.3			(87	)	(1.3	)		305			460
Interest expense		(160	)	(2.4	)		(86	)	(1.3	)		(74	)		(112	)
Other income, net		76		1.1			61		0.9			15			23
Income tax expense (benefit)		40		0.6			(150	)	(2.3	)		(190	)		287
Net income	$	94		1.4	%	$	38		0.6	%	$	56			85

(1)

Represents favorable (unfavorable) year over year change.

Note: Sums may not equal totals due to rounding.

Net Sales

For the twelve and forty weeks ended October 10, 2026, net sales were relatively flat. Comparable store sales for the twelve and forty weeks ended October 10, 2026 decreased 1.2% and increased 0.8%, respectively, compared with the same period in 2025.

The Company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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Gross Profit

For the twelve weeks ended October 10, 2026 and October 4, 2025, gross profit was $0.9 billion, or 44.6% of net sales, and $0.9 billion, or 43.3% of net sales, respectively. For the forty weeks ended October 10, 2026 and October 4, 2025, gross profit was $3.0 billion, or 45.3% of net sales, and $2.9 billion or 43.2% of net sales, respectively. The increase in gross profit as a percentage of net sales compared to the prior comparative periods was driven by expansion in product margin, partially offset by channel and product mix unfavorability. The forty weeks ended October 10, 2026 also benefited from the recognition of tariff refunds in the second quarter of fiscal 2026 and the impact of lower margin liquidation sales related to our 2024 Restructuring Plan, which negatively impacted gross profit margin for the forty weeks ended October 4, 2025.

Selling, General and Administrative Expenses, Exclusive of Restructuring and Related Expenses

For the twelve weeks ended October 10, 2026, SG&A expenses, exclusive of restructuring and related expenses, were $0.8 billion, or 40.2% of net sales, compared with $0.8 billion, or 40.6% of net sales for the twelve weeks ended October 4, 2025. For the forty weeks ended October 10, 2026, SG&A expenses, exclusive of restructuring and related expenses, were $2.7 billion, or 40.7% of net sales, compared with $2.8 billion, or 41.8% of net sales, for the forty weeks ended October 4, 2025. Overall, SG&A expenses decreased in the twelve and forty weeks ended October 10, 2026, as compared to the prior comparative periods, primarily as a result of operating cost savings realized from our restructuring plans. The forty weeks ended October 10, 2026 also benefited from operating costs eliminated for stores closed in the first quarter of fiscal 2025 as a result of our 2024 Restructuring Plan, as such operating costs prior to closure were included in the forty weeks ended October 4, 2025.

Restructuring and Related Expenses

For the twelve weeks ended October 10, 2026, restructuring and related expenses were $42 million, or 2.1% of net sales compared to $33 million, or 1.6% of net sales for the twelve weeks ended October 4, 2025. The increase in expenses as compared to the prior year comparative period was primarily due to an increase in impairment charges for store and distribution center locations impacted through the Company's active restructuring plans. For the forty weeks ended October 10, 2026, restructuring and related expenses were $84 million, or 1.3% of net sales, compared to $180 million, or 2.7% of net sales, in the prior year comparable period. The decrease in expenses as compared to the same period in fiscal 2025 relates to timing of the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024, with the majority of costs being incurred during fiscal 2024, and during the first half of fiscal 2025 following the closure of all stores under the Plan in the first quarter of fiscal 2025. Substantially all of the costs under the restructuring plans have been incurred as of October 10, 2026. The Company estimates that it will incur additional expenses of approximately $5 million to $10 million through the remainder of fiscal 2026 related to the active restructuring plans. See Note 11. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

Interest Expense

For the twelve weeks and forty weeks ended October 10, 2026, interest expense increased as compared to the same periods in fiscal 2025, due to an increase in the principal amount of interest bearing long-term debt from the debt issuance completed in the third quarter of fiscal 2025.

Other Income, Net

For the twelve weeks and forty weeks ended October 10, 2026, other income, net increased as compared to the same periods in fiscal 2025, due to higher interest income driven by (i) higher invested cash balances, reflecting the net proceeds from the issuance of $1.95 billion of Senior Unsecured Notes in the third quarter of fiscal 2025, and (ii) higher interest rates on our invested cash balances. This was partially offset by lower income recognized from the transition services agreement with Worldpac.

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Income Tax Expense (Benefit)

For the twelve weeks ended October 10, 2026, the Company's provision for income taxes reflected an expense of $9 million, inclusive of a discrete charge in the period from return-to-provision adjustments related to the filing of prior-year returns, as compared to a benefit of $1 million for the same period during 2025. The change year-over-year was driven by an increase in net income. For the forty weeks ended October 10, 2026, the Company’s provision for income taxes reflected an expense of $40 million compared with an income tax benefit of $150 million for the same period in 2025. The income tax benefit in fiscal 2025 resulted from a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million, related to an internal legal entity restructuring event completed in the fiscal year treated as a taxable stock disposition for U.S. federal income tax purposes. As a result, the Company recognized a capital loss deduction which was utilized against capital gain income.

Liquidity and Capital Resources

Overview

The Company’s principal sources of liquidity are cash and cash equivalents and borrowing availability under the asset-based loan revolving credit facility (the "ABL Facility"). We generate cash through our operating activities and the Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, such as restructuring and asset optimization plans. In addition, cash is required to pay the Company’s dividends and to pay interest and principal on the Company’s long-term debt when due. The following table presents selected financial information related to the Company’s liquidity (in millions):


	October 10, 2026		January 3, 2026		Change
Cash and cash equivalents	$	3,085	$	3,123	$	(38	)
ABL Facility borrowing availability		894		896		(2	)

Cash and cash equivalents decreased in the period, as net cash provided by operating activities of $311 million was offset by $200 million used for purchases of property and equipment, net of proceeds from sales; the final working capital payment made related to the Company's sale of Worldpac totaling $55 million; the payment of $45 million in dividends; and the repayment of $29 million of long-term debt.

The Company believes that its cash and cash equivalents and sources of liquidity will satisfy its working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future.

Analysis of Cash Flows

The Company’s cash flows from operating, investing and financing activities were as follows (in millions):


	Forty Weeks Ended
(in millions)	October 10, 2026			October 4, 2025
Net cash provided by (used in) operating activities	$	311		$	(118	)
Net cash used in investing activities of continuing operations		(209	)		(137	)
Net cash used in investing activities of discontinued operations		(55	)		—
Net cash (used in) provided by financing activities		(82	)		1,559
Effect of exchange rate changes on cash		(3	)		1
Net (decrease) increase in cash and cash equivalents	$	(38	)	$	1,305

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Operating Activities

For the forty weeks ended October 10, 2026, cash provided by operating activities changed favorably by $429 million compared with the same period of prior year. The increase as compared to the comparative period was due to lower cash charges related to the 2024 Restructuring Plan and other changes in net working capital.

Investing Activities

For the forty weeks ended October 10, 2026, cash flows used in investing activities of continuing operations increased by $72 million compared with the forty weeks ended October 4, 2025, with higher spend on property and equipment, net in the current period, as the Company continues to invest in information technology, supply chain, e-commerce, new greenfield store and distribution center sites and enhancements and/or major renovation projects of existing stores.

Net cash used in investing activities of discontinued operations for the forty weeks ended October 10, 2026, increased by $55 million compared with the forty weeks ended October 4, 2025, due to the timing of the final working capital payment made related to the Company's sale of Worldpac.

Financing Activities

For the forty weeks ended October 10, 2026, cash flows used in financing activities increased by $1.6 billion compared with the forty weeks ended October 4, 2025. In the third quarter of fiscal 2025, the Company received net proceeds of approximately $1.6 billion related to the issuance of the 2025 Senior Unsecured Notes and the redemption of the 5.90% 2026 Notes.

The Company’s Board of Directors has declared a cash dividend every quarter since 2006. Any payments of dividends in the future will be at the discretion of the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Board of Directors. The Company’s ABL Facility has certain restrictions that may limit its ability to increase the amount of cash dividends above its current levels.

Long-Term Debt

As of October 10, 2026 and January 3, 2026, the Company had outstanding principal of long-term debt totaling $3.4 billion and $3.5 billion, respectively, with $350 million of outstanding principal due within the next twelve months related to the 1.75% Senior Unsecured Notes due October 1, 2027.

For further details, see Note 5. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

Credit Facilities

The ABL Facility provides for a five-year senior secured first lien asset-based revolving credit facility of up to $1 billion with an uncommitted accordion feature that provides for additional credit extensions up to $500 million.

In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts as defined in the ABL Facility. As of October 10, 2026 and January 3, 2026, approximately $2.3 billion of cash and cash equivalents was designated as Qualified Cash and are subject to customary “springing” control agreements, as described in the ABL Facility agreement.

As of October 10, 2026 and January 3, 2026, the Company had no outstanding borrowings under its ABL Facility. As of October 10, 2026 and January 3, 2026, the Company had $894 million and $896 million of borrowing availability, respectively, and $106 million and $104 million letters of credit outstanding, respectively, under the ABL Facility.

As of October 10, 2026 and January 3, 2026, the Company had no bilateral letters of credit issued separately from the ABL Facility agreement.

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For further details, see Note 5. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

Additional Capital Requirements

Expected working and other capital requirements, including Contractual and Off-Balance Sheet Obligations are described in the Company’s 2025 Form 10-K in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of October 10, 2026, other than for the changes disclosed in the “Notes to the Condensed Consolidated Financial Statements”, and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to the Company’s expected working and other capital requirements described in the Company’s 2025 Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the Company’s exposure to market risk since January 3, 2026. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2025 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are management’s controls and other procedures that are designed to ensure that information required to be disclosed by management in the Company’s reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the override of controls. Therefore, even those systems determined to be effective can provide only “reasonable assurance” with respect to the reliability of financial reporting and financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness may vary over time.

Management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures as of October 10, 2026. Based on this evaluation, the principal executive officer and the principal financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the third quarter ended October 10, 2026, that has materially affected or is reasonably likely to materially affect its internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

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PART II. OTHER INFORMATION

None.

ITEM 1. LEGAL PROCEEDINGS

Information regarding certain legal proceedings is provided in this Quarterly Report. See Note 9. Commitments and Contingencies, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

ITEM 1A. RISK FACTORS

The Company’s future business, operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026, which could adversely affect the Company’s business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of the Company’s common stock. Other than for matters disclosed in the "Business and Risks Update" in this Quarterly Report, there have been no material changes to the Company’s risk factors since the 2025 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the information with respect to repurchases of the Company’s common stock for the quarter ended October 10, 2026:


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)
July 19, 2026 to August 15, 2026		514	$	56.55		—	$	947
August 16, 2026 to September 12, 2026		4,452	$	47.02		—	$	947
September 13, 2026 to October 10, 2026		11,437	$	42.55		—	$	947
Total		16,403				—

(1)

All repurchases reported in this table relate to the withholding of shares upon the vesting of restricted stock units to settle income tax liabilities (“net settlement”). The aggregate cost of repurchasing shares in connection with the net settlement of shares issued as a result of the vesting of restricted stock units was $1 million, or an average price of $44.20 per share, during the third quarter of 2026.

ITEM 5. OTHER INFORMATION

During the third quarter of 2026, no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company’s officers or directors as each term is defined in Item 408 of Regulation S-K.

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EXHIBIT INDEX


		Incorporated by Reference			Filed
Exhibit No.	Exhibit Description	Form	Exhibit	Filing Date	Herewith
3.1	Composite Restated Certificate of Incorporation of Advance Auto Parts, Inc., effective August 9, 2024.	10-Q	3.2	8/22/2024
3.2	Amended and Restated Bylaws of Advance Auto Parts, Inc., effective August 8, 2023.	8-K	3.1	8/14/2023
22.1	List of the Issuer and its Guarantor Subsidiaries.	10-Q	22.1	8/20/2026
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.				X
101.SCH	Inline XBRL Taxonomy Extension Schema Document.				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				X
104.1	Cover Page Interactive Data file (Embedded within the Inline XBRL Documents and Included in Exhibit).				X

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			ADVANCE AUTO PARTS, INC.

	Date: November 5, 2026		/s/ Ryan P. Grimsland
			Ryan P. Grimsland Executive Vice President, Chief Financial Officer

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane M. O'Kelly, certify that:

I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s)and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2026

     /s/ Shane M. O'Kelly

    

     Shane M. O'Kelly

    

     President and Chief Executive Officer and Director

    

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ryan P. Grimsland, certify that:

I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2026

     /s/ Ryan P. Grimsland

    

     Ryan P. Grimsland

    

     Executive Vice President, Chief Financial Officer

    

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane M. O'Kelly, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarter ended October 10, 2026 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying report.

     Date:

     November 5, 2026

     By: 

     /s/ Shane M. O'Kelly

      
      Name:  Shane M. O'Kelly
 Title:  President and Chief Executive Officer and Director

I, Ryan P. Grimsland, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarter ended October 10, 2026 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying report.

     Date:

     November 5, 2026

     By: 

     /s/ Ryan P. Grimsland

      
      Name:  Ryan P. Grimsland
 Title:  Executive Vice President, Chief Financial Officer