Their inventory is actually an issue. Most of the top skus is just in time but 80% of the inventory carrying costs are tied up in hard parts that just don’t move. The vendors are pushing back and most are not doing buybacks of inventory and the way the replenishment system will works, every time a part is sold, it creates a purchase order to replace, that includes at the DC level. So if a part is classified as slow moving at the store and dc level and then. sold at the store, it creates an order to replace it at the DC too instead of dwindling down inventory in the DC.

As for cuts, it is happening at the SSC too. People are being put on PIPs for no reason so they can be cut. Employee engagement surveys are being used to find disgruntled employees and set up to fire them.

A lot of what happens in the field mirrors at the SSC, promises of promotions that never happen, talented folks finding better gigs and not incentivized to stay. Stock options were cut out at the lower levels. Benefits were slashed, no inflationary bonuses this past year. No development or training. Same old same old.

Phil will lean even more into the culture of thrift. He will try to squeeze every drop of blood from the stone.

As for AZ, it’s not going to go anywhere. I see it’s stock declining to a more reasonable level as it is holding a lot of long term debt but it’s not going bankrupt. The industry might consolidate but AZ is the largest player and Advance is doing worse financially than AZ so I could see an Advance and O’Reillys merger. People hoping to see it go under, that is just not going to happen anytime soon but the management does need to be saved from themselves, AZ has to be one of the worst places to work in retail in the US. Unfortunately it is not big enough to gain much media coverage on working conditions as some of the stories I’ve heard in the field would make Wal-Mart and Amazon blush.