CarParts.com signals $10M annualized savings and advances strategic review amid tariff volatility

Earnings Call Insights: CarParts.com (PRTS) Q2 2025

MANAGEMENT VIEW

* CEO David Meniane opened the call by updating on the ongoing process to explore strategic alternatives, stating, "we remain fully engaged in our process and are highly confident that this process is nearing completion." Meniane indicated the company is evaluating several transaction structures, including a possible sale and strategic investments, but noted, "there can be no assurance that we will reach a transaction."
* Meniane detailed impacts from tariffs, revealing, "approximately 20% of our private label products are imported from China, and the rest from Taiwan and other countries," and outlined mitigation efforts such as cost concessions from vendor partnerships, dynamic pricing, and supply chain optimization.
* The company achieved positive adjusted EBITDA in June, supported by growth in mobile app revenues, high-margin fee income, and improvements in marketing efficiency, with the mobile app now accounting for 12% of e-commerce revenues and exceeding 1 million users.
* Meniane announced a restructuring initiative, including the closure of the Virginia facility and streamlining of corporate headcount, which is expected to generate approximately $10 million in annualized cost savings.
* CFO Ryan Lockwood stated, "In the second quarter, we reported revenue of $151.9 million, up 5% from $144.3 million last year. The increase was primarily driven by an increase in our e-commerce channel and our off-line channel partially offset by continued softness in our marketplace channel."
* Lockwood noted gross profit reached $49.8 million, while gross margin was 32.8%, down from 33.5% in the prior year period, citing product mix and tariffs as the main drivers of margin compression.

OUTLOOK

* Management remains focused on disciplined growth, customer experience, and operational efficiency. Meniane reiterated the commitment to "protecting gross margins, reducing operating expenses and driving more efficient marketing spend."
* The company is prioritizing expansion of product offerings, increasing high-margin fee income from its website and customer base, scaling its B2B business, growing its mobile app channel, and protecting the balance sheet while navigating tariff volatility.
* Meniane stated, "While certain investments will take time to fully materialize, we're confident they'll unlock long-term value."

FINANCIAL RESULTS

* CarParts.com reported revenue of $151.9 million for Q2 2025, an increase from $144.3 million in the prior year period.
* Gross profit was $49.8 million, with a gross margin of 32.8% compared to 33.5% in the previous year.
* The company posted a GAAP net loss of $12.7 million, compared to a net loss of $8.7 million in the prior year, impacted by lower gross margin, higher marketing costs, one-time advisory fees related to the strategic review, and restructuring costs.
* Adjusted EBITDA loss was $3.1 million, down from adjusted EBITDA of $0.1 million in the prior year period.
* Cash at quarter end stood at $19.8 million, with inventory at $94 million versus $90 million at the end of 2024.

Q&A

* NOT_APPLICABLE: The transcript does not contain a Q&A session or analyst questions for this quarter.

SENTIMENT ANALYSIS

* Analyst sentiment cannot be assessed for this quarter, as there were no analyst questions or Q&A exchanges included in the transcript.
* Management tone was cautiously optimistic during prepared remarks, emphasizing confidence in the strategic review process and operational improvements, as seen in Meniane's statement, "we're confident they'll unlock long-term value," and Lockwood's highlight of sequential business progress.
* Compared to the previous quarter, management maintained a similar focus on operational discipline and strategic transformation, but with more emphasis on cost control and confidence in ongoing initiatives.

QUARTER-OVER-QUARTER COMPARISON

* The current quarter featured a more detailed update on the strategic review process, with management signaling it is nearing completion, whereas the prior quarter only referenced its ongoing nature.
* Revenue increased from $147.4 million in Q1 to $151.9 million in Q2, and gross profit improved from $47.3 million to $49.8 million.
* Gross margin slightly improved sequentially (from Q1’s 32.1% to Q2’s 32.8%), though both remain lower year-over-year due to product mix and tariff impacts.
* Management initiated more aggressive cost-saving actions this quarter, announcing a $10 million annualized savings plan through facility closure and headcount reduction, as opposed to last quarter's focus on inventory management and marketing efficiency.
* The tone shifted from emphasizing recovery from Q1’s weather and demand headwinds to a stronger focus on restructuring and readiness for market volatility.

RISKS AND CONCERNS

* Management cited ongoing tariff volatility, with rates on Chinese imports ranging from 55% to 75% and Taiwan-sourced products facing tariffs of about 25%.
* The influx of noncompliant products from China, often lacking safety standards, is distorting competition and pressuring the Marketplaces segment.
* Consumer demand remains under pressure, especially in discretionary categories, due to tariffs and inflation.
* Management is actively mitigating these risks through cost concessions, pricing adjustments, diversification of sourcing, and a focus on proprietary channels and house brands.
* The closure of the Virginia facility and streamlining of headcount were also framed as risk mitigation to align fixed costs with current volume levels.

FINAL TAKEAWAY

CarParts.com management underscores confidence in the near completion of its strategic review and the effectiveness of its cost-saving initiatives, including $10 million in annualized savings from operational restructuring. Despite persistent tariff and macroeconomic headwinds, leadership highlights sequential business improvements and ongoing investments in technology and customer engagement as key to driving long-term profitability and resilience for the company and its shareholders.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/prts/earnings/transcripts]

MORE ON CARPARTS

* CarParts.com, Inc. (PRTS) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4812824-carparts-com-inc-prts-q2-2025-earnings-call-transcript]
* Seeking Alpha’s Quant Rating on CarParts [https://seekingalpha.com/symbol/PRTS/ratings/quant-ratings]
* Historical earnings data for CarParts [https://seekingalpha.com/symbol/PRTS/earnings]
* Financial information for CarParts [https://seekingalpha.com/symbol/PRTS/income-statement]