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Advance Auto Parts Said to Hire Blackstone on Review

Nov. 2 (Bloomberg) -- Advance Auto Parts Inc. is working with Blackstone Group LP to examine strategic options including a potential sale, according to a person with knowledge of the matter.

The person asked not to be named because the process is private. The Roanoke, Virginia-based retailer has a market value of about $6 billion. CNBC reported earlier that Advance Auto is reviewing options.

Advance Auto, led by Chief Executive Officer Darren Jackson, is weighing strategies after posting back-to-back profit declines for the first time in almost four years, hurt by faltering demand from consumers and commercial customers. A buyer may close stores rather than expand, benefiting rivals, according to Stifel Financial Corp.

“We see the long-term dynamics of the auto-parts sector as more stable and profitable than other parts of retail” because of lesser competitive threats from online and mass or discount stores, David Schick, a Stifel analyst in Baltimore, said in a note dated yesterday. Most buyout firms concentrate on cost-cutting rather than opening stores or increasing marketing, he said, giving peers “some peripheral competitive benefit.”

Schick rates Advance Auto hold. The retailer operates more than 3,700 stores across the U.S.

Advance Auto slipped 1.3 percent to $79.97 at the close in New York after climbing 14 percent yesterday. AutoZone Inc. rose 0.7 percent to $382.91, while O’Reilly Automotive Inc. gained 0.3 percent to $88.35.

Shelly Whitaker and Joshua Moore, representatives for Advance Auto, didn’t respond to telephone calls and e-mails seeking comment. A spokeswoman for Blackstone declined to comment.

Last month, Advance Auto reported preliminary results, saying that per-share earnings fell 14 percent from the year-earlier period as promotions and advertising spending ate into shrinking sales. The company is scheduled to report full results Nov. 8.

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net

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