(Bloomberg) -- Advance Auto Parts Inc., whose sales and share price has lagged its peers, should proceed with its divestiture of WorldPac stores to generate $2 billion to $3 billion, according to activist investor Legion Partners Asset Management.
The auto parts retailer should also improve compensation to better compete with AutoZone Inc. and O’Reilly Automotive Inc., Legion Partners said Monday in a presentation at the Bloomberg Activism Forum.
Shares of Advance Auto Parts, based in Raleigh, North Carolina, rose as much as 5.2% Monday. They had fallen 62% this year, giving the company a market value of about $3.3 billion. The stock has declined 47% over the past decade, compared with AutoZone’s 470% increase and a 657% return for O’Reilly.
Legion co-founder and Managing Director Chris Kiper, disclosing Legion’s stake in the company, said his firm has had discussions with Advance Auto Parts and might have an announcement soon.
A representative for Advance Auto Parts didn’t immediately respond to requests for comment.
Advance Auto Parts said in November that it was initiating a sale process for its WorldPac wholesale distributer business, as well as its Canadian business serving mostly commercial customers under the Carquest banner.
The company should also start extending accounts payable to improve its finances, Legion argues.
This year, Legion has pushed for a sale of OneSpan Inc., urged Clear Channel Outdoor Holdings Inc. to sell assets more quickly and pressured VF Corp. to divest brands such as Timberland. Legion has also won seats on boards in connection with its campaigns, as it had done previously at OneSpan.
(Updates with co-founder’s comment in fourth paragraph.)
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