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What changed in CarParts.com, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CarParts.com, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+221 added−183 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-08)

Top changes in CarParts.com, Inc.'s 2025 10-K

221 paragraphs added · 183 removed · 161 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMarketing Our online marketing efforts are primarily designed to attract visitors to www.carparts.com , convert visitors into purchasing customers and encourage repeat purchases among our existing customer base. We use a variety of marketing methods, including online marketing methods to attract visitors, which include paid search advertising, search engine optimization, affiliate programs, e-mail marketing and inclusion in online shopping engines.
Biggest changeWe use a variety of marketing methods, including online marketing methods to attract visitors, which include paid search advertising, search engine optimization, affiliate programs, e-mail marketing and inclusion in online shopping engines. To convert visitors into paying customers, we periodically run promotions for discounted products.
Following our reincorporation in Delaware in 2006, we expanded our online operations, bolstering our eCommerce network, launching additional websites, refining our internet marketing strategies, and commencing sales on various online marketplaces. In July 2020, we officially rebranded to CarParts.com and consolidated our web presence into one single eCommerce destination .
Following our reincorporation in Delaware in 2006, we expanded our online operations, bolstering our eCommerce network, launching additional websites, refining our internet marketing strategies, and commencing sales on various online marketplaces. In July 2020, we officially rebranded to CarParts.com and consolidated our web presence into one single eCommerce destination, www.carparts.com .
We believe the principal competitive factors in our market are helping customers easily find their parts, educating consumers on the service and maintenance of their vehicles, maintaining a proprietary product catalog that maps individual parts to relevant vehicle applications, broad product selection and availability, price, knowledgeable customer service, rapid order fulfillment and delivery, and easy product returns.
We believe the principal competitive factors in our market are helping customers easily find the correct parts for their vehicles, educating consumers on the service and maintenance of their vehicles, maintaining a proprietary product catalog that maps individual parts to relevant vehicle applications, broad product selection and availability, price, knowledgeable customer service, rapid order fulfillment and delivery, and easy product returns.
Our house brands suppliers offer products which are generally of the same quality as a branded product while being less expensive and we believe provide better value for our consumers. We stock-and-ship our house brands products in our distribution centers. We currently have over 76,000 house brands SKUs in our product selection. Branded Product .
Our house brands suppliers offer products which are generally of the same quality as a branded product while being less expensive and we believe provide better value for our consumers. We stock-and-ship our house brands products in our distribution centers. We currently have over 78,000 house brands SKUs in our product selection. Branded Product .
These taxes or restrictions could have an adverse effect on our cash flows, results of operations and overall financial condition. Furthermore, there is a possibility that we may be subject to significant fines or other payments for any past failures to comply with these requirements. Seasonality We believe our business is somewhat seasonal in nature.
These taxes or restrictions, including potential tariffs, could have an adverse effect on our cash flows, results of operations and overall financial condition. Furthermore, there is a possibility that we may be subject to significant fines or other payments for any past failures to comply with these requirements. Seasonality We believe our business is somewhat seasonal in nature.
Established in California in 1995 as an aftermarket auto parts distributor, the Company – then-known as U.S. Auto Parts Network, Inc. – embarked on a digital transformation journey in 2000, with the launch of our first retail website.
Incorporated in California in 1995 as an aftermarket auto parts distributor, the Company – then known as U.S. Auto Parts Network, Inc. – embarked on a digital transformation journey in 2000, with the launch of our first retail website.
We believe that the flexibility of fulfilling orders using two different fulfillment methods allows us to offer a broader product selection, helps optimize product inventory and enhances our overall business profitability. Stock-and-Ship Fulfillment .
We believe that the flexibility of fulfilling orders using two different fulfillment methods allows us to offer a broader product selection, helps optimize product inventory and enhances our overall business profitability. 2 Table of Contents Stock-and-Ship Fulfillment .
We consider a number of factors in determining which items to stock in our distribution centers, including which products can be purchased at a 2 Table of Contents meaningful discount to domestic prices for similar items, which products have historically sold in high volumes, and which products may be out of stock when we attempt to fulfill via drop-ship.
We consider a number of factors in determining which items to stock in our distribution centers, including which products can be purchased at a meaningful discount to domestic prices for similar items, which products have historically sold in high volumes, and which products may be out of stock when we attempt to fulfill via drop-ship. Drop-Ship Fulfillment .
ITEM 1. BUSINESS Overview CarParts.com, Inc. is a technology-driven eCommerce company dedicated to revolutionizing the way drivers shop for parts. With over 25 years of operation, CarParts.com serves as an end-to-end solution for automotive repair and maintenance resources, offering a seamless online shopping experience that empowers drivers along every part of their journey.
ITEM 1. BUSINESS Overview CarParts.com, Inc. is a technology-driven eCommerce company dedicated to revolutionizing the way drivers shop for aftermarket automotive parts. With over 25 years of operation, CarParts.com serves as a one-stop shop for repair and maintenance resources, offering a seamless online shopping experience that empowers drivers along every part of their journey.
Our offshore operations also house our main call center. We also primarily source our house brands product from suppliers in the Asia-Pacific region. 3 Table of Contents Competition The auto repair information and parts industry is competitive and highly fragmented, with products distributed through multi-tiered and overlapping channels.
We also primarily source our house brands product from suppliers in the Asia-Pacific region. 3 Table of Contents Competition The auto repair information and parts industry is competitive and highly fragmented, with products distributed through multi-tiered and overlapping channels.
Our online sales channel primarily consists of our flagship, mobile-friendly eCommerce website www.carparts.com , and app. We also sell our products through online marketplaces, including third-party auction sites and shopping portals, which provide us with access to additional consumer segments. The majority of our online sales are to individual consumers. Offline Sales Channel .
Our Sales Channels Our sales channels include the online channel and the offline channel. Online Sales Channel . Our online sales channel primarily consists of our flagship, mobile-friendly eCommerce website www.carparts.com , and app. We also sell our products through online marketplaces, including third-party auction sites and shopping portals, which provide us with access to additional consumer segments.
None of our employees are represented by a labor union and we consider employee relations to be good. Diversity and Inclusion We strive to build and create a culture where each person feels valued, respected and understood. As of December 30, 2023, the makeup of our employees consisted of 39% women and approximately 82% non-white.
None of our employees are represented by a labor union and we consider employee relations to be good. Diversity and Inclusion We strive to build and create a culture where each person feels valued, respected and understood. As of December 28, 2024, the makeup of our employees consisted of 39% women and approximately 84% non-white.
The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website. 5 Table of Contents
The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website.
We principally sell our products, identified as stock keeping units (“SKUs”), to individual consumers through our flagship website, www.carparts.com , and online marketplaces. Our easy-to-use, mobile-friendly website and newly launched mobile app provide customers with a comprehensive selection of approximately 1,047,000 SKUs, complete with detailed product descriptions, attributes, and photographs.
We principally sell our products, identified as stock keeping units (“SKUs”), to individual consumers through our flagship website, www.carparts.com , our app, and online marketplaces. Our easy-to-use, mobile-friendly website and mobile app provide customers with a comprehensive selection of over 1 million SKUs, complete with detailed product descriptions, attributes, and photographs.
We market our products nationwide to auto parts wholesale distributors. Our Fulfillment Operations We fulfill customer orders using two primary methods: (1) stock-and-ship, where we take physical delivery of merchandise and store it in one of our distribution centers until it is shipped to a customer, and (2) drop-ship, where merchandise is shipped directly to customers from our suppliers.
Our Fulfillment Operations We fulfill customer orders using two primary methods: (1) stock-and-ship, where we take physical delivery of merchandise and store it in one of our distribution centers until it is shipped to a customer, and (2) drop-ship, where merchandise is shipped directly to customers from our suppliers.
Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge on the Investor Relations section of our corporate website located at www.carparts.com/investor as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Available Information Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports are available free of charge on the Investor Relations section of our corporate website located at www.carparts.com/investor as soon as reasonably practicable after such reports are electronically filed with, or 5 Table of Contents furnished to, the SEC.
In addition, we are a significant customer for many of our drop-ship vendors and have long standing relationships and contracts with many of these suppliers. For the fiscal year ended December 30, 2023, three of our drop-ship vendors accounted for approximately 11% of our total product purchases. We currently have over 971,000 branded SKUs in our product selection.
In addition, we are a significant customer for many of our drop-ship vendors and have long standing relationships and contracts with many of these suppliers. For the fiscal year ended December 28, 2024, three of our drop-ship vendors accounted for approximately 13% of our total product purchases. We currently have over 1,466,000 branded SKUs in our product selection.
Drop-Ship Fulfillment . We have developed relationships with several United States-based auto parts distributors that operate their own distribution centers and can deliver products directly to our customers. We internally developed a proprietary distributor selection system, Auto-Vend™, which allows us to electronically select multiple vendors for a given order.
We have developed relationships with several United States-based auto parts distributors that operate their own distribution centers and can deliver products directly to our customers. We internally developed a proprietary distributor selection system, Auto-Vend™, which allows us to electronically select multiple vendors for a given order. Auto-Vend™ will attempt to first direct an order to one of our warehouses.
Human Capital Our ability to recruit, retain, and develop our employees is key to our long-term growth and success. As of December 30, 2023, we had 1,080 employees in the United States and 615 employees in the Philippines for a total of 1,695 employees. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce.
Human Capital Our ability to recruit, retain, and develop our employees is key to our long-term growth and success. As of December 28, 2024, we had 948 employees in the United States and 518 employees in the Philippines for a total of 1,466 employees. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce.
Auto-Vend™ will attempt to first direct an order to one of our warehouses. If the product is not in stock, Auto-Vend™ will process the order to the next appropriate vendor based on customer location, cost, contractual agreements, and service level history.
If the product is not in stock, Auto-Vend™ will process the order to the next appropriate vendor based on customer location, cost, contractual agreements, and service level history.
By investing in new categories, brands, customer types and revenue streams across both premium and value segments, we seek to maximize gross profit and capture a larger market share. In tandem, we have refined our eCommerce experience and marketing strategy, focusing on enhancing the mobile app experience, building brand awareness through innovative owned content channels, and fostering direct customer relationships.
By investing in new categories, brands, customer types, and revenue streams across both premium and value segments, we seek to maximize gross profit and capture a larger market share. In tandem, we have refined our eCommerce experience and marketing strategy, prioritizing direct customer relationships and strengthening our community through innovative owned content channels.
International Operations In April 2007, we established offshore operations in the Philippines. Our offshore operations allow us to access a workforce with the necessary technical skills at a significantly lower cost than comparably experienced U.S.-based professionals. Our offshore operations are responsible for a majority of our website development, catalog management, and back office support.
Our offshore operations allow us to access a workforce with the necessary technical skills at a significantly lower cost, and a higher availability rate, than comparably experienced U.S.-based professionals. Our offshore operations are responsible for a majority of our website development, catalog management, and back office support. Our offshore operations also house our main call center.
To convert visitors into paying customers, we periodically run promotions for discounted products. We seek to create cross-selling opportunities by displaying complementary and related products available for sale throughout the purchasing process, including bundled kits and sets. We utilize several marketing techniques, including targeted e-mails about specific vehicle promotions, to increase customer awareness of our products.
We seek to create cross-selling opportunities by displaying complementary and related products available for sale throughout the purchasing process, including bundled kits and sets. We utilize several marketing techniques, including targeted e-mails about specific vehicle promotions, to increase customer awareness of our products. International Operations In April 2007, we established offshore operations in the Philippines.
We also provide competitive compensation and benefits programs that we believe meet the needs of our employees. Health and Safety We have implemented, and continue to implement, policies that provide for the health, safety and wellness of our employees. We are committed to operating in a safe workplace, and have established safety procedures and safety programs at our distribution centers.
We also provide competitive compensation and benefits programs that we believe meet the needs of our employees. Health and Safety We have implemented, and continue to implement, policies that provide for the health, safety and wellness of our employees.
These efforts aim to position CarParts.com as the ultimate destination for vehicle maintenance knowledge and product purchases, thereby reducing reliance on performance marketing channels and improving customer acquisition efficiency. Our corporate website is located at www.carparts.com/investor . 1 Table of Contents We report on a 52/53-week fiscal year, ending on the Saturday nearest the end of December.
These efforts aim to position CarParts.com as the ultimate destination for vehicle maintenance knowledge and product purchases, fostering 1 Table of Contents long-term brand loyalty while reducing reliance on “pay-to-play” performance marketing channels and improving customer acquisition efficiency. Our corporate website is located at www.carparts.com/investor .
We have a significant opportunity to become the go-to destination for all automotive repair and maintenance requirements by focusing on our evolved strategy around: optimizing supply chain management and upgrading logistics, investing in technology, expanding into new business lines, and driving year-over-year increases in new customers, all while maintaining our financial discipline approach of evaluating investments based on their impact on profitability.
Priced Right.” We have a significant opportunity to become the go-to destination for all automotive repair and maintenance requirements by focusing on our evolved strategy. This includes optimizing supply chain management and upgrading logistics, investing in technology, expanding into new business lines.
Performance parts and accessories generally consist of parts that enhance the performance of the automobile, upgrade existing functionality of a specific part or improve the physical appearance or comfort of the automobile. Our Sales Channels Our sales channels include the online channel and the offline channel. Online Sales Channel .
Other Parts and Accessories . Other parts and accessories generally consist of parts that enhance the performance of the automobile, upgrade existing functionality of a specific part or improve the physical appearance or comfort of the automobile, including parts from one of our own house brands, JC Whitney ® .
We continually refine our product offering by introducing new brands and parts categories, while discontinuing low-selling brands and SKUs. We broadly classify our products into three subcategories by function: replacement parts serving the wear and tear and body repair market, hard parts to serve the maintenance and repair market, and performance parts and accessories. Replacement Parts .
We broadly classify our products into three subcategories by function: replacement parts serving the wear and tear and body repair market, hard parts to serve the maintenance and repair market, and other parts and accessories (formerly referred to as performance parts and accessories). Replacement Parts .
Intellectual Property 4 Table of Contents Our intellectual property, including trademarks, service marks, domain names, patents, copyrights and trade secrets, is an important part of our business.
We are committed to operating in a safe workplace, and have established safety procedures and safety programs at our distribution centers. 4 Table of Contents Intellectual Property Our intellectual property, including trademarks, service marks, domain names, patents, copyrights and trade secrets, is an important part of our business.
References to 2023, 2022, and 2021 relate to the 52-week fiscal year ended December 30, 2023, the 52-week fiscal year ended December 31, 2022, and the 52-week fiscal year ended January 1, 2022, respectively. Our Products We offer a broad selection of aftermarket auto parts.
References to 2024 and 2023 relate to the 52-week fiscal year ended December 28, 2024 and the 52-week fiscal year ended December 30, 2023, respectively. Our Products We offer a broad selection of aftermarket auto parts. We continually refine our product offering by introducing new brands and parts categories, while selectively discontinuing low-selling brands and SKUs.
Our vision of “Empowering Drivers Along Their Journey” underscores our mission to create a trusted platform that simplifies the historically stressful experience of vehicle maintenance & repair.
Driven by our commitment to providing unparalleled customer experience, we use world-class design principles and the latest technology to power our user-friendly website and app. Our vision of “Empowering Drivers Along Their Journey” underscores our mission to create a trusted platform that simplifies the historically stressful experience of vehicle maintenance & repair with “Quality Parts.
In the third quarter of 2023, we added a mobile app, available on both iOS and Android, enabling our customers to conveniently shop from their phones. Driven by our commitment to providing unparalleled customer experience, we use world-class design principles and the latest technology to power our user-friendly website and app.
In the third quarter of 2023, we added a mobile app, available on both iOS and Android, enabling our customers to conveniently shop from their phones. Since launching in the summer of 2023, the app has been downloaded over 750,000 times, reflecting strong engagement and adoption among our customers.
To this end, we are working to transform our fulfillment center footprint and are opening a new semi-automated facility in Las Vegas, Nevada, which we expect to reduce last-mile transportation expenses to the West Coast and enhance customer service through expedited delivery. Furthermore, we continuously expand our technological capabilities, product offerings, and service portfolio to stay ahead of competitive pressures.
In June 2024, we opened our new state-of-the-art fulfillment center in Las Vegas, Nevada, expanding from 125,000 sq. ft. to over 200,000 sq. ft., which we expect to reduce last-mile transportation expenses to the West Coast and enhance customer service through expedited delivery.
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Performance Parts and Accessories . We offer performance versions of many parts sold in each of the above categories, including parts from one of our own house brands, JC Whitney ® .
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Throughout this process, we remain committed to maintaining our financial discipline, evaluating investments based on their potential to drive profitability. To this end, we are continually working to enhance our fulfillment center footprint, capacity and productivity.
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The semi-automated center is integrated with cutting-edge AI capabilities designed to optimize operations, improve safety, and expand product availability. Furthermore, we continuously expand our technological capabilities, product offerings, and service portfolio to stay ahead of competitive pressures.
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The information found on the website is not part of, or incorporated by reference into, this or any other report we file with, or furnish to, the Securities and Exchange Commission (the “SEC”). We report on a 52/53-week fiscal year, ending on the Saturday nearest the end of December.
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The majority of our online sales are to individual consumers. Offline Sales Channel . We market our products nationwide to auto parts wholesale distributors.
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Marketing Our online marketing efforts are primarily designed to attract visitors to www.carparts.com , convert visitors into purchasing customers and encourage downloading our app as well as repeat purchases among our existing customer base.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related To Our Use Of Technology ● We depend on search engines and other online sources to attract visitors to our websites and marketplace channels, and the ability to attract and convert them into customers in a cost-effective manner. ● We rely on bandwidth and data center providers, and any failure or interruption in the services provided could disrupt our business and cause us to lose customers. ● Security threats, such as ransomware attacks, to our IT infrastructure could expose us to liability, business interruption and significant damages, and may damage our reputation and business. ● Dependence on open-source software could expose us to uncertainty and potential liability. ● System failures could prevent access to our websites which could reduce our net sales and harm our reputation. ● Problems with the design, updating, integration or implementation of our IT systems could interfere with our business and operations. ● Inability to respond to technological change causing our websites to become obsolete. ● Use of social media may adversely impact our reputation or subject us to fines or other penalties.
Biggest changeRisks Related To Our Use Of Technology ● We depend on search engines and other online sources to attract visitors to our websites and marketplace channels, and the ability to attract and convert them into customers in a cost-effective manner. ● We rely on bandwidth and data center providers, and any failure or interruption in the services provided could disrupt our business and cause us to lose customers. ● Security threats, such as ransomware attacks, to our IT infrastructure could expose us to liability, business interruption and significant damages, and may damage our reputation and business. ● Dependence on open-source software could expose us to uncertainty and potential liability. ● System failures could prevent access to our websites which could reduce our net sales and harm our reputation. ● Problems with the design, updating, integration or implementation of our IT systems could interfere with our business and operations. ● Inability to respond to technological change causing our websites to become obsolete. ● Use of social media may adversely impact our reputation or subject us to fines or other penalties. 7 Table of Contents Risks Related To Our Capital Stock ● Our common stock price may continue to be volatile, which may result in losses to our stockholders. ● Our future operating results may fluctuate and may fail to meet market expectations. ● Failure to maintain an effective system of internal control over financial reporting or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could cause our stock price to decline. ● Our charter documents could deter a takeover effort, which could inhibit your ability to receive an acquisition premium for your shares. ● We do not intend to pay dividends on our common stock. ● We cannot guarantee that our share repurchase program will enhance shareholder value and share repurchases could affect the price of our common stock. ● Future capital raises may dilute our existing stockholders’ ownership. ● We are required to meet the Nasdaq Global Market’s continued listing requirements.
The factors that could cause our operating results to continue to fluctuate include, but are not limited to: ● fluctuations in the demand for aftermarket auto parts; ● fluctuations in the availability of products for resale; ● price competition on the Internet or among offline retailers for auto parts; ● our ability to attract visitors to our websites and convert those visitors into customers, including to the extent based on our ability to successfully work with different search engines to drive visitors to our websites; ● our ability to successfully sell our products through third-party online marketplaces or the effects of any price increases in those marketplaces; ● competition from companies that have longer operating histories, larger customer bases, greater brand recognition, access to merchandise at lower costs and significantly greater resources than we do, like third-party online market places and our suppliers; 25 Table of Contents ● our ability to maintain and expand our supplier and distribution relationships without significant price increases or reduced service levels; ● our ability to borrow funds under our Credit Facility; ● the effects of seasonality on the demand for our products; ● our ability to accurately forecast demand for our products, price our products at market rates and maintain appropriate inventory levels; ● our ability to build and maintain customer loyalty; ● our ability to successfully integrate our acquisitions; ● infringement actions that could impact the viability of the auto parts aftermarket or portions thereof; ● the success of our brand-building and marketing campaigns; ● our ability to accurately project our future revenues, earnings, and results of operations; ● government regulations related to use of the Internet for commerce, including the application of existing tax regulations to Internet commerce and changes in tax regulations; ● technical difficulties, system downtime or Internet brownouts; ● the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure; and ● macroeconomic conditions that adversely impact the general and automotive retail sales environment.
The factors that could cause our operating results to continue to fluctuate include, but are not limited to: ● fluctuations in the demand for aftermarket auto parts; ● fluctuations in the availability of products for resale; ● price competition on the Internet or among offline retailers for auto parts; ● our ability to attract visitors to our websites and convert those visitors into customers, including to the extent based on our ability to successfully work with different search engines to drive visitors to our websites; ● our ability to successfully sell our products through third-party online marketplaces or the effects of any price increases in those marketplaces; ● competition from companies that have longer operating histories, larger customer bases, greater brand recognition, access to merchandise at lower costs and significantly greater resources than we do, like third-party online market places and our suppliers; ● our ability to maintain and expand our supplier and distribution relationships without significant price increases or reduced service levels; ● our ability to borrow funds under our Credit Facility; ● the effects of seasonality on the demand for our products; ● our ability to accurately forecast demand for our products, price our products at market rates and maintain appropriate inventory levels; 27 Table of Contents ● our ability to build and maintain customer loyalty; ● our ability to successfully integrate our acquisitions; ● infringement actions that could impact the viability of the auto parts aftermarket or portions thereof; ● the success of our brand-building and marketing campaigns; ● our ability to accurately project our future revenues, earnings, and results of operations; ● government regulations related to use of the Internet for commerce, including the application of existing tax regulations to Internet commerce and changes in tax regulations; ● technical difficulties, system downtime or Internet brownouts; ● the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure; and ● macroeconomic conditions that adversely impact the general and automotive retail sales environment.
Additionally, if we are unable to successfully implement any new IT system, remediate, update or integrate our existing systems at times when necessary, our financial position, results of operations and cash flows could be negatively impacted. ​ If we do not respond to technological change, our websites could become obsolete and our financial results and conditions could be adversely affected.
Additionally, if we are unable to successfully maintain or implement any new IT system, remediate, update or integrate our existing systems at times when necessary, our financial position, results of operations and cash flows could be negatively impacted. ​ If we do not respond to technological change, our websites could become obsolete and our financial results and conditions could be adversely affected.
In declining economies, consumers often defer regular vehicle maintenance and may forego purchases of nonessential performance and accessories products, which can result in a decrease in demand for auto parts in general. Consumers also defer purchases of new vehicles, which immediately impacts performance parts and accessories, which are generally purchased in the first six months of a vehicle’s lifespan.
In declining economies, consumers often defer regular vehicle maintenance and may forego purchases of nonessential performance and accessories products, which can result in a decrease in demand for auto parts in general. Consumers also defer purchases of new vehicles, which immediately impacts other parts and accessories, which are generally purchased in the first six months of a vehicle’s lifespan.
Such provisions include the following: ● our Board of Directors are authorized, without prior stockholder approval, to create and issue preferred stock which could be used to implement anti-takeover devices; ● advance notice is required for director nominations or for proposals that can be acted upon at stockholder meetings; ● stockholder and stockholder nominees for director are required to provide detailed information, regarding both the relevant stockholder and nominee, in connection with stockholder nominations for director; ● our Board of Directors is classified such that not all members of our board are elected at one time, which may make it more difficult for a person who acquires control of a majority of our outstanding voting stock to replace all or a majority of our directors; ● stockholder action by written consent is prohibited except with regards to an action that has been approved by the Board of Directors; ● special meetings of the stockholders are permitted to be called only by the chairman of our Board of Directors or by a majority of our Board of Directors; ● stockholders are not permitted to cumulate their votes for the election of directors; and ● stockholders are permitted to amend certain provisions of our bylaws only upon receiving at least 66 2/3% of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
Such provisions include the following: ● our Board of Directors are authorized, without prior stockholder approval, to create and issue preferred stock which could be used to implement anti-takeover devices; ● advance notice is required for director nominations or for proposals that can be acted upon at stockholder meetings; ● stockholder and stockholder nominees for director are required to provide detailed information, regarding both the relevant stockholder and nominee, in connection with stockholder nominations for director; ● our Board of Directors is classified such that not all members of our board are elected at one time, which may make it more difficult for a person who acquires control of a majority of our outstanding voting stock to replace all or a majority of our directors; 28 Table of Contents ● stockholder action by written consent is prohibited except with regards to an action that has been approved by the Board of Directors; ● special meetings of the stockholders are permitted to be called only by the chairman of our Board of Directors or by a majority of our Board of Directors; ● stockholders are not permitted to cumulate their votes for the election of directors; and ● stockholders are permitted to amend certain provisions of our bylaws only upon receiving at least 66 2/3% of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
A failure, or perceived failure, to respond to investor or customer expectations related to ESG concerns could impact the value of our brand, the cost of our operations or relationships with investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG matters could adversely affect our business.
A failure, or perceived failure, to respond to investor, employee or customer expectations related to ESG concerns could impact the value of our brand, the cost of our operations or relationships with investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG matters could adversely affect our business.
Regulatory And Litigation Risks ● Possible new tariffs that might be imposed by the United States government. ● We face exposure to product liability lawsuits. ● Failure to comply with privacy laws and regulations and failure to adequately protect customer data. ● The regulatory framework is constantly evolving, and privacy concerns could adversely affect our business. ● Challenges by OEMs to the validity of the auto parts industry and claims of intellectual property infringement. ● Inability to protect our intellectual property rights. ​ ● We could incur substantial judgments, fines, legal fees and other costs relating to litigation matters or certain laws and governmental regulations. ● Changes in tax laws or regulations that are applied adversely to us or our customers. ● Existing or future government regulation could expose us to liabilities and costly changes in our business. ● We may be affected by global climate change or by legal, regulatory, or market responses to such change. ● Potential impact from future regulation related to environmental, social and governance (“ESG”) matters.
Regulatory And Litigation Risks ● Tariffs and other restrictions imposed by the United States government. ● We face exposure to product liability lawsuits. ● Failure to comply with privacy laws and regulations and failure to adequately protect customer data. ● The regulatory framework is constantly evolving, and privacy concerns could adversely affect our business. ● Challenges by OEMs to the validity of the auto parts industry and claims of intellectual property infringement. ● Inability to protect our intellectual property rights. ​ ● We could incur substantial judgments, fines, legal fees and other costs relating to litigation matters or certain laws and governmental regulations. ● Changes in tax laws or regulations that are applied adversely to us or our customers. ● Existing or future government regulation could expose us to liabilities and costly changes in our business. ● We may be affected by global climate change or by legal, regulatory, or market responses to such change. ● Potential impact from future regulation related to environmental, social and governance (“ESG”) matters.
These risks are discussed in more detail below and include, but are not limited to, risks related to the following: Risks Related To Our Operations ● We are dependent upon relationships with suppliers in Taiwan and China for the majority of our products. ● We depend on third-party delivery services, both inbound and outbound, to deliver our products to our distribution centers and customers, and any increases in the fees could adversely affect our financial condition. ● Higher wage costs due to changes in federal and state minimum wage laws could adversely affect our business. ● If commodity prices such as fuel, plastic and steel increase, our margins may be negatively impacted. ● Purchasers of aftermarket auto parts may not choose to shop online. ● Shifting online consumer behavior of purchasers of aftermarket auto parts. ● If hosts of third-party marketplaces limit our access, we could lose a substantial portion of our revenues. ● In the future, our business could be affected by the effects from a prolonged COVID-19 outbreak or another pandemic. ● During fiscal year 2023, we recorded a net loss, and it is possible that net losses could continue in the future. ● Our operations are restricted by our credit agreement, and our ability to borrow funds under our credit facility is subject to a borrowing base. ● If our assets become impaired, we may be required to record a significant charge to earnings. ● We are highly dependent upon key suppliers. ● Inability to manage the challenges associated with our international operations. ● If our fulfillment operations are interrupted for any significant period of time, our sales could decline. ● We face intense competition and operate in an industry with limited barriers to entry. ● Failure to offer a broad selection of products at competitive prices or to maintain sufficient inventory. ● We rely on key personnel and may need additional personnel for the success and growth of our business. ● As a result of our international operations, we have foreign exchange risk. ● Our product catalog database could be stolen, misappropriated or damaged, or a competitor might create a substantially similar catalog without infringing our rights. 6 Table of Contents ● Economic conditions have had, and may continue to have, an adverse effect on the demand for aftermarket auto parts and could adversely affect our sales and operating results. ● The seasonality of our business places increased strain on our operations. ● Vehicle miles driven have fluctuated and may decrease. ● We may be required to collect and pay more sales taxes, and possibly for other fees and penalties. ● Our ability to use net operating loss carryforwards to offset future income may be limited. ● Our estimate of the size of our addressable market may prove to be inaccurate.
These risks are discussed in more detail below and include, but are not limited to, risks related to the following: Risks Related To Our Operations ● We are dependent upon relationships with suppliers in Taiwan and China for the majority of our products. ● Our preliminary exploration of potential strategic alternatives, announced on March 5, 2025, may not be successful. ● We depend on third-party delivery services, both inbound and outbound, to deliver our products to our distribution centers and customers, and any increases in the fees could adversely affect our financial condition. ● Higher wage costs due to changes in federal and state minimum wage laws could adversely affect our business. ● If commodity prices such as fuel, plastic and steel increase, our margins may be negatively impacted. ● Purchasers of aftermarket auto parts may not choose to shop online. ● Shifting online consumer behavior of purchasers of aftermarket auto parts. ● If hosts of third-party marketplaces limit our access, we could lose a substantial portion of our revenues. ● During fiscal year 2024, we recorded a net loss, and it is possible that net losses could continue in the future. ● Our operations are restricted by our Credit Agreement, and our ability to borrow funds under our Credit Facility is subject to a borrowing base. ● If our assets become impaired, we may be required to record a significant charge to earnings. ● We are highly dependent upon key suppliers. ● Inability to manage the challenges associated with our international operations. ● If our fulfillment operations are interrupted for any significant period of time, our sales could decline. ● We face intense competition and operate in an industry with limited barriers to entry. ● Failure to offer a broad selection of products at competitive prices or to maintain sufficient inventory. ● We rely on key personnel and may need additional personnel for the success and growth of our business. ● In the future, our business could be adversely affected by the effects from a prolonged COVID-19 outbreak or another pandemic. 6 Table of Contents ● As a result of our international operations, we have foreign exchange risk. ● Our product catalog database could be stolen, misappropriated or damaged, or a competitor might create a substantially similar catalog without infringing our rights. ● Economic conditions have had, and may continue to have, an adverse effect on the demand for aftermarket auto parts and could adversely affect our sales and operating results. ● The seasonality of our business places increased strain on our operations. ● Vehicle miles driven have fluctuated and may decrease. ● We may be required to collect and pay more sales taxes, and possibly for other fees and penalties. ● Our ability to use net operating loss carryforwards to offset future income may be limited. ● Our estimate of the size of our addressable market may prove to be inaccurate.
Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business. ​ Challenges by OEMs to the validity of the aftermarket auto parts industry and claims of intellectual property infringement could adversely affect our business and the viability of the aftermarket auto parts industry.
Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the U.S., which could increase our potential liability and adversely affect our business. ​ 20 Table of Contents Challenges by OEMs to the validity of the aftermarket auto parts industry and claims of intellectual property infringement could adversely affect our business and the viability of the aftermarket auto parts industry.
Our Credit Facility also provides for an option to increase the aggregate principal amount from 11 Table of Contents $75,000 to $150,000, subject to certain terms and conditions. Our credit agreement with JPMorgan originally entered into on April 26, 2012 (as amended, the “Credit Agreement”) includes a number of restrictive covenants.
Our Credit Facility also provides for an option to increase the aggregate principal amount from $75,000 to $150,000, subject to certain terms and conditions. Our credit agreement with JPMorgan originally entered into on April 26, 2012 (as amended, the “Credit Agreement”) includes a number of restrictive covenants.
In particular, we rely on Google as an 21 Table of Contents important marketing channel, and if Google changes its algorithms or if competition increases for advertisements on Google or on our marketplace channels, we may be unable to cost-effectively attract customers to our products. Our agreements with our marketing providers generally have terms of one year or less.
In particular, we rely on Google as an important marketing channel, and if Google changes its algorithms or if competition increases for advertisements on Google or on our marketplace channels, we may be unable to cost-effectively attract customers to our products. Our agreements with our marketing providers generally have terms of one year or less.
Specific factors that could discourage or prevent prospective customers from purchasing from us include: ● concerns about buying auto parts without face-to-face interaction with sales personnel; ● the inability to physically handle, examine and compare products; ● delivery time associated with Internet orders; ● concerns about the security of online transactions and the privacy of personal information; ● delayed shipments or shipments of incorrect or damaged products; ● increased shipping costs; and ● the inconvenience associated with returning or exchanging items purchased online.
Specific factors that could discourage or prevent prospective customers from purchasing from us include: ● concerns about buying auto parts without face-to-face interaction with sales personnel; ● increased desire to purchase American-made products; ● the inability to physically handle, examine and compare products; ● delivery time associated with Internet orders; ● concerns about the security of online transactions and the privacy of personal information; ● delayed shipments or shipments of incorrect or damaged products; ● increased shipping costs; and ● the inconvenience associated with returning or exchanging items purchased online.
If further tariffs are imposed on imports of our products, or retaliatory trade measures are taken by China or other countries in response to existing or future tariffs, we could be forced to raise prices on all of our imported products or make changes to our operations, any of which could materially harm our revenue or operating results.
If further tariffs are imposed on imports of our products, or retaliatory trade measures 19 Table of Contents are taken by China or other countries in response to existing or future tariffs, we could be forced to raise prices on all of our imported products or make changes to our operations, any of which could materially harm our revenue or operating results.
If these strategies are not successful, our operating results and financial conditions could be materially and adversely affected. If we fail to offer a broad selection of products at competitive prices or fail to maintain sufficient inventory to meet customer demands, our revenue could decline.
If these strategies are not successful, our operating results and financial conditions could be materially and adversely affected. 16 Table of Contents If we fail to offer a broad selection of products at competitive prices or fail to maintain sufficient inventory to meet customer demands, our revenue could decline.
We also currently own or control a number of Internet domain names, including www.carparts.com , www.jcwhitney.com , www.autopartswarehouse.com and www.usautoparts.com , and have invested time and money in the purchase of domain names and other intellectual property, which may be impaired if we cannot protect such intellectual property.
We also currently own or control a number of Internet domain names, including www.carparts.com , www.jcwhitney.com , www.autopartswarehouse.com and www.usautoparts.com , and have invested time and money in the purchase of domain names and other intellectual property, including the development of our app, which may be impaired if we cannot protect such intellectual property.
In addition, we have and post on our websites our own privacy policies and practices concerning the 18 Table of Contents collection, use and disclosure of customer data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S.
In addition, we have and post on our websites our own privacy policies and practices concerning the collection, use and disclosure of customer data. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, U.S.
If we are unable to continue to adapt our mobile device shopping experience from desktop based online shopping 10 Table of Contents in ways that improve our customer’s mobile experience and increase the engagement of our mobile customers our sales may decline and our business and financial results may suffer.
If we are unable to continue to adapt our mobile device shopping experience from desktop based online shopping in ways that improve our customer’s mobile experience and increase the engagement of our mobile customers our sales may decline and our business and financial results may suffer.
Our relationships with our third-party marketplace providers could deteriorate as a result of a variety of factors, such as if they become concerned about our ability to deliver quality products on a timely basis or to protect a third-party’s intellectual property.
Our relationships with our third-party marketplace providers 11 Table of Contents could deteriorate as a result of a variety of factors, such as if they become concerned about our ability to deliver quality products on a timely basis or to protect a third-party’s intellectual property.
We review our long-lived assets for impairment annually, or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered are changes in circumstances indicating that the carrying value of our assets may not be recoverable include a decrease in future cash flows.
We review our long-lived assets for impairment annually, or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered are changes in circumstances indicating that the carrying value of our assets may not be fully recoverable, including a decrease in future cash flows.
Any Internet network interruptions or problems with our websites could: ● prevent customers from accessing our websites; ● reduce our ability to fulfill orders or bill customers; ● reduce the number of products that we sell; ● cause customer dissatisfaction; or 23 Table of Contents ● damage our brand and reputation.
Any Internet network interruptions or problems with our websites could: ● prevent customers from accessing our websites; ● reduce our ability to fulfill orders or bill customers; ● reduce the number of products that we sell; ● cause customer dissatisfaction; or ● damage our brand and reputation.
In the event that components of the borrowing base are adversely affected for any reason, including adverse market conditions or downturns in general economic conditions, we could be restricted in the amount of funds we can borrow under the Credit Facility.
In the event that components of the borrowing base are adversely affected for any reason, including adverse market conditions or downturns in general economic conditions, we could be restricted in the amount 12 Table of Contents of funds we can borrow under the Credit Facility.
While management has concluded that our internal controls over financial reporting were effective as of December 30, 2023, we have in the past identified, and could in the future identify, a significant deficiency or material weakness in internal control over financial reporting or fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002.
While management has concluded that our internal controls over financial reporting were effective as of December 28, 2024, we have in the past identified, and could in the future identify, a significant deficiency or material weakness in internal control over financial reporting or fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002.
We cannot be certain that all of our information technology systems are able to prevent, contain or detect any cyber-attacks, cyber terrorism, or security breaches from known malware or malware that may be developed in the future.
We cannot be certain that all of our 24 Table of Contents information technology systems are able to prevent, contain or detect any cyber-attacks, cyber terrorism, or security breaches from known malware or malware that may be developed in the future.
Since the completion of our initial public offering in February 2007 through December 30, 2023, the trading price of our common stock has been volatile. We have also experienced significant fluctuations in the trading volume of our common stock. General economic and political conditions unrelated to our performance may also adversely affect the price of our common stock.
Since the completion of our initial public offering in February 2007 through December 28, 2024, the trading price of our common stock has been volatile. We have also experienced significant fluctuations in the trading volume of our common stock. General economic and political conditions unrelated to our performance may also adversely affect the price of our common stock.
These warmer weather conditions could result in a decrease in demand for auto parts in general. Moreover, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered by policy makers in the United States.
These warmer weather conditions could result in a decrease in demand for auto parts in general. Moreover, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered by policy 22 Table of Contents makers in the United States.
We have 15 Table of Contents implemented and will continue to implement several strategies to attempt to overcome the challenges created by our suppliers selling directly to our customers and potential customers, including optimizing our pricing, continuing to increase our mix of house brands products and improving our websites, which may not be successful.
We have implemented and will continue to implement several strategies to attempt to overcome the challenges created by our suppliers selling directly to our customers and potential customers, including optimizing our pricing, selling the complete job, continuing to increase our mix of house brands products and improving our websites, which may not be successful.
In addition, because many of our suppliers are outside of the United States, additional factors could interrupt our relationships or affect our ability to acquire the necessary products on acceptable terms, including: ● political, social and economic instability, and the risk of war or other international incidents in Asia, Europe, or abroad, including, but not limited to, the effects of disputes between China and Taiwan and Russia’s invasion of Ukraine; ● fluctuations in foreign currency exchange rates that may increase our cost of products; ● imposition of duties, taxes, tariffs or other charges on imports; ● difficulties in complying with import and export laws, regulatory requirements and restrictions; ● natural disasters and public health emergencies, such as the COVID-19 pandemic or other future pandemics, impacting countries from which we purchase product; ● import shipping delays resulting from foreign or domestic labor shortages, slow-downs, or stoppage; and ● the failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property; ● imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our product that may be imported into the U.S. from countries or regions where we do business; ● financial or political instability in any of the countries in which our product is manufactured; ● potential recalls or cancellations of orders for any product that does not meet our quality standards; ● disruption of imports by labor disputes or strikes and local business practices; 8 Table of Contents ● political or military conflict involving the U.S. or any country in which our suppliers are located, which could cause a delay in the transportation of our products, an increase in transportation costs and additional risk to product being damaged and delivered on time; ● heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; ● inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and ● our ability to enforce any agreements with our foreign suppliers.
In addition, because many of our suppliers are outside of the United States, additional factors could interrupt our relationships or affect our ability to acquire the necessary products on acceptable terms, including: ● political, social and economic instability, social unrest, and the risk of war or other international incidents in Asia, Europe, or abroad, including, but not limited to, the effects of disputes between China and Taiwan and Russia’s invasion of Ukraine; ● global political changes, including as a result of the change in the U.S. presidential administration; ● deterioration in U.S.-China trade relations, including increased tensions, policy shifts, or regulatory changes, increased tariffs, trade restrictions, or sanctions affecting our supply chain and product imports; ● changes in bilateral agreements between the U.S. and China that could disrupt established supply chains, increase compliance costs, or limit our ability to source products efficiently; ● fluctuations in foreign currency exchange rates that may increase our cost of products; ● imposition of duties, taxes, tariffs or other charges on imports; ● difficulties in complying with import and export laws, regulatory requirements and restrictions; ● natural disasters and public health emergencies, such as the COVID-19 pandemic or other future pandemics, impacting countries from which we purchase product; 8 Table of Contents ● import shipping delays resulting from foreign or domestic labor shortages, slow-downs, or stoppage; and ● the failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property; ● imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our product that may be imported into the U.S. from countries or regions where we do business; ● financial or political instability in any of the countries in which our product is manufactured; ● potential recalls or cancellations of orders for any product that does not meet our quality standards; ● disruption of imports by labor disputes or strikes and local business practices; ● political or military conflict involving the U.S. or any country in which our suppliers or transportation routes for our products are located, which could cause a delay in the transportation of our products, an increase in transportation costs and additional risk to product being damaged and delivered on time; ● heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods; ● inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and ● our ability to enforce any agreements with our foreign suppliers.
If a successful claim were brought against us, it could expose us to significant liability. 19 Table of Contents If we are unable to protect our intellectual property rights, our reputation and brand could be impaired and we could lose customers.
If a successful claim were brought against us, it could expose us to significant liability. If we are unable to protect our intellectual property rights, our reputation and brand could be impaired and we could lose customers.
We are highly dependent upon key suppliers and an interruption in such relationships or our ability to obtain parts from such suppliers could adversely affect our business and results of operations. Our top ten suppliers represented approximately 52% of our total product purchases during the fiscal year ended December 30, 2023.
We are highly dependent upon key suppliers and an interruption in such relationships or our ability to obtain parts from such suppliers could adversely affect our business and results of operations. Our top ten suppliers represented approximately 51% of our total product purchases during the fiscal year ended December 28, 2024.
We do not presently have a formal disaster recovery plan in effect and may not have sufficient insurance for losses that may occur from natural disasters or catastrophic events.
We do not presently have a formal disaster recovery plan in effect and may not have sufficient insurance for losses that may occur from natural 25 Table of Contents disasters or catastrophic events.
Additional 20 Table of Contents laws and regulations may be adopted with respect to the Internet, the effect of which on eCommerce is uncertain.
Additional laws and regulations may be adopted with respect to the Internet, the effect of which on eCommerce is uncertain.
For the fiscal year ended December 30, 2023, our product purchases from three drop-ship suppliers 13 Table of Contents represented approximately 11% of our total product purchases. Because we outsource to suppliers a number of these traditional retail functions relating to those products, we have limited control over how and when orders are fulfilled.
For the fiscal year ended December 28, 2024, our product purchases from three drop-ship suppliers represented approximately 13% of our total product purchases. Because we outsource to suppliers a number of these traditional retail functions relating to those products, we have limited control over how and when orders are fulfilled.
If the ERP system does not operate as intended, it could adversely affect our financial reporting systems and our ability to produce financial reports and process transactions.
If the ERP system does not continue to operate as intended, or requires significant updates, it could adversely affect our financial reporting systems and our ability to produce financial reports and process transactions.
Competition for such personnel is intense, and we cannot assure that we will be successful in attracting and retaining such personnel. The loss of any key employee or our inability to attract or retain other qualified employees could harm our business and results of operations. As a result of our international operations, we have foreign exchange risk.
Competition for such personnel is intense, and we cannot assure that we will be successful in attracting and retaining such personnel. The loss of any key employee or our inability to attract or retain other qualified employees could harm our business and results of operations.
Any disruption in the network access or co-location services, which are the services that house and provide Internet access to our servers, provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business.
We rely on third-party vendors, including data center and bandwidth providers. Any disruption in the network access or co-location services, which are the services that house and provide Internet access to our servers, provided by these third-party providers or any failure of these third-party providers to handle current or higher volumes of use could significantly harm our business.
In the future, our suppliers may limit the amount of credit they are willing to extend to us in connection with our purchase of their products.
Furthermore, as part of our routine business, suppliers extend credit to us in connection with our purchase of their products. In the future, our suppliers may limit the amount of credit they are willing to extend to us in connection with our purchase of their products.
Third-party marketplaces account for a significant portion of our revenues. Our sales on third-party marketplaces (including eBay and Amazon) represented a combined 35.6% of total sales in the fiscal year ended December 30, 2023. We anticipate that sales of our products on third-party marketplaces will continue to account for a significant portion of our revenues.
Third-party marketplaces account for a significant portion of our revenues. Our sales on third-party marketplaces (including eBay and Amazon) represented a combined 36.5% of total sales in the fiscal year ended December 28, 2024. We anticipate that sales of our products on third-party marketplaces will continue to account for a significant portion of our revenues.
We recently implemented a new enterprise resource planning system in fiscal year 2022, and we may occasionally update or integrate other IT systems. Problems with the design, integration or implementation of these systems could interfere with our business and operations. ​ We recently completed a multi-year implementation of a new global enterprise resource planning system (ERP) in fiscal year 2022.
Problems with the design, integration or implementation of these systems could interfere with our business and operations. ​ We recently completed a multi-year implementation of a new global enterprise resource planning system (ERP) in that was implemented in fiscal year 2022.
The existence of any such deficiencies or weaknesses, even if remediated, may also lead to the loss of investor confidence in the reliability of our financial statements, could harm our business and negatively impact the trading price of our common stock.
The existence of any such deficiencies or weaknesses, even if remediated, may also lead to the loss of investor confidence in the reliability of our financial statements, could harm our business and negatively impact the trading price of our common stock. Such deficiencies or material weaknesses may also subject us to lawsuits, regulatory investigations and other penalties.
We depend on third-party delivery services, for both inbound and outbound shipping, to deliver our products to our distribution centers and subsequently to our customers on a timely and consistent basis, and any deterioration in our relationship with any one of these third parties or increases in the fees that they charge could harm our reputation and adversely affect our business and financial condition.
Such alternatives may materially adversely affect the value of our business and the trading price of our common stock. 9 Table of Contents We depend on third-party delivery services, for both inbound and outbound shipping, to deliver our products to our distribution centers and subsequently to our customers on a timely and consistent basis, and any deterioration in our relationship with any one of these third parties or increases in the fees that they charge could harm our reputation and adversely affect our business and financial condition.
The Company’s outstanding letters of credit balance as of December 30, 2023 was $680, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheet. If our assets become impaired, we may be required to record a significant charge to earnings.
The Company’s outstanding letters of credit balance as of December 28, 2024 was $680, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheet. 13 Table of Contents If our long-lived assets become impaired, we may be required to record a significant charge to earnings.
We sell aftermarket auto parts consisting of replacement parts, hard parts, and performance parts. Demand for our products has been and may continue to be adversely affected by general economic conditions, unemployment levels, inflation, rising interest rates from the U.S. Federal Reserve as a response to inflation, or other heightened cost pressures on consumers.
Demand for our products has been and may continue to be adversely affected by general economic conditions, consumer sentiment, unemployment levels, inflation, rising interest rates from the U.S. Federal Reserve as a response to inflation, or other heightened cost pressures on consumers.
We also use social media platforms as marketing tools or as channels to disseminate information. For example, the Company and its executive officers maintain Facebook, Instagram, Twitter, LinkedIn, and other social media accounts, where marketing and other information relevant to customers and investors is disseminated.
For example, the Company and its executive officers maintain Facebook, Instagram, Twitter, LinkedIn, and other social media accounts, where marketing and other information relevant to customers and investors is disseminated.
We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our assets is determined, resulting in an impact on our results of operations.
We may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our long-lived assets is determined, which would negatively affect our results of operations.
Similarly, if any free search engine, shopping comparison site, or marketplace site on which we rely begins charging fees for listing or placement, or if one or more of the search engines, shopping comparison sites, marketplace sites and other online sources on which we rely for purchased listings, increases their fees, or modifies or terminates its relationship with us, our expenses could rise, we could lose customers and traffic to our websites could decrease.
Similarly, if any free search engine, shopping comparison site, or marketplace site on which we rely begins charging fees for listing or placement, or if one or more of the search engines, shopping comparison sites, marketplace sites and other online sources on which we rely for purchased listings, increases their fees, or modifies or terminates its relationship with us, our expenses could rise, we could lose customers and traffic to our websites could decrease. 23 Table of Contents We rely on bandwidth and data center providers and other third parties to provide products to our customers, and any failure or interruption in the services provided by these third parties could disrupt our business and cause us to lose customers.
A public health pandemic, such as the COVID-19 pandemic, may negatively impact our business, distribution centers, customers, suppliers, employees and third party shipping providers.
A public health pandemic, such as the COVID-19 pandemic, or another pandemic and its effects, potentially could adversely affect future years. ​ A public health pandemic, such as the COVID-19 pandemic, may negatively impact our business, distribution centers, customers, suppliers, employees and third-party shipping providers.
Prolonged effects of COVID-19, or a future pandemic, could also potentially disrupt our operations through, but not limited to, shipping container shortages, transportation delays, and changes in our operating procedures, including the need for additional cleaning and safety protocols. ​ During fiscal year 2023, we recorded a net loss, and our net losses may continue in the future.
Prolonged effects of COVID-19, or a future pandemic, could also potentially disrupt our operations through, but not limited to, shipping container shortages, transportation delays, and changes in our operating procedures, including the need for additional cleaning and safety protocols. ​ As a result of our international operations, we have foreign exchange risk.
As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.
As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties. 26 Table of Contents Risks Related To Our Capital Stock Our common stock price has been and may continue to be volatile, which may result in losses to our stockholders.
We cannot ensure that we can recover all the increased costs through price increases, and our suppliers may not continue to provide the consistent quality of product as they may substitute lower cost materials to maintain pricing levels, all of which may have a negative impact on our business and results of operations.
We cannot ensure that we can recover all the increased costs through price increases, and our suppliers may not continue to provide the consistent quality of product as they may substitute lower cost materials to maintain pricing levels, all of which may have a negative impact on our business and results of operations. 10 Table of Contents Purchasers of aftermarket auto parts may not choose to shop online, which would prevent us from acquiring new customers who are necessary to the growth of our business.
Provisions in our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders.
Our charter documents could deter a takeover effort, which could inhibit your ability to receive an acquisition premium for your shares. Provisions in our certificate of incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our stockholders.
Any additional future tariffs or quotas imposed on our products or related materials may impact our sales, gross margin and profitability if we are unable to pass increased prices onto our customers. ​ We face exposure to product liability lawsuits.
Any additional future tariffs or quotas imposed on our products or related materials may impact our sales, gross margin and profitability if we are unable to pass increased prices onto our customers. Currently, we cannot fully determine how these tariffs will affect our business operations.
We do not presently have a formal disaster recovery plan and our business interruption insurance may be insufficient to compensate us for losses that may occur in the event operations at our fulfillment center are interrupted. In addition, alternative arrangements may not be available, or if they are available, may increase the cost of fulfillment.
We do not currently maintain back-up power systems at our fulfillment centers. We do not presently have a formal disaster recovery plan and our business interruption insurance may be insufficient to compensate us for losses 15 Table of Contents that may occur in the event operations at our fulfillment center are interrupted.
Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs as well as reputational harm. ​ We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons.
If we are not able to protect our trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty. 21 Table of Contents Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we could incur substantial judgments, fines, legal fees and other costs as well as reputational harm. ​ We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various reasons.
Changing carriers could have a negative effect on our business and operating results due to reduced visibility of order status and package tracking and delays in order processing and product delivery, and we may be unable to engage alternative carriers on a timely basis, upon terms favorable to us, or at all. 9 Table of Contents Higher wage costs due to changes in federal and state minimum wage laws, or due to unstable market conditions, could adversely affect our business. ​ Changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefit costs.
Changing carriers could have a negative effect on our business and operating results due to reduced visibility of order status and package tracking and delays in order processing and product delivery, and we may be unable to engage alternative carriers on a timely basis, upon terms favorable to us, or at all.
In addition, our distribution centers are susceptible to damage or interruption from human error, fire, flood, power loss, telecommunications failures, terrorist attacks, acts of war, break-ins, earthquakes and similar events. We do not currently maintain back-up power systems at our fulfillment centers.
If we do not successfully expand our fulfillment capabilities in response to increases in demand, our sales could decline. In addition, our distribution centers are susceptible to damage or interruption from human error, sickness related to a pandemic, fire, flood, power loss, telecommunications failures, terrorist attacks, acts of war, break-ins, earthquakes and similar events.
In the event our product catalog is damaged or is stolen, copied or otherwise replicated to compete with us, whether lawfully or not, we may lose an important competitive advantage and our business could be harmed. 16 Table of Contents Economic conditions have had, and may continue to have, an adverse effect on the demand for aftermarket auto parts and could adversely affect our sales and operating results.
In the event our product catalog is damaged or is stolen, copied or otherwise replicated to 17 Table of Contents compete with us, whether lawfully or not, we may lose an important competitive advantage and our business could be harmed.
(“JPMorgan”), which under certain circumstances may not be available, sell additional assets or seek additional equity or additional debt financing in the future. In such case, there can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all.
In such case, there can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all.
If successful, any of these attacks could negatively affect our reputation, damage our network infrastructure and our ability to sell our products, harm our relationship with customers that are affected and expose us to financial liability. 22 Table of Contents Given the rapidly evolving nature and proliferation of cyber threats, our internal controls relating to cybersecurity may not prevent or identify all such attacks in a timely manner or otherwise prevent unauthorized access to, damage to, or interruption of our systems and operations, and we cannot eliminate the risk of human error or employee or vendor malfeasance.
Given the rapidly evolving nature and proliferation of cyber threats, our internal controls relating to cybersecurity may not prevent or identify all such attacks in a timely manner or otherwise prevent unauthorized access to, damage to, or interruption of our systems and operations, and we cannot eliminate the risk of human error or employee or vendor malfeasance.
The majority of orders for our auto parts products are filled from our inventory in our distribution centers, where all our inventory management, packaging, labeling and product return processes are performed.
The majority of orders for our auto parts products are filled from our inventory in our distribution centers, where all our inventory management, packaging, labeling and product return processes are performed. Increased demand and other considerations may require us to expand our distribution centers or transfer our fulfillment operations to larger or other facilities in the future.
In January 2024, we were deemed to be PCI compliant by PCI DSS 3.2.1, the new security standards as issued by the PCI Council.
We currently are deemed to be PCI compliant by PCI DSS 4.0.1, the new security standards as issued by the PCI Council.
If our net losses continue in the future, they could severely impact our liquidity, as we may not be able to provide positive cash flows from operations in order to meet our working capital requirements. We may need to borrow additional funds from our asset-based revolving credit facility (the “Credit Facility”) with JPMorgan Chase Bank, N.A.
During fiscal year 2024, we recorded a net loss, and our net losses may continue in the future. If our net losses continue in the future, they could severely impact our liquidity, as we may not be able to provide positive cash flows from operations in order to meet our working capital requirements.
There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Credit Agreement. 12 Table of Contents While we did not have any outstanding revolver loan debt under our Credit Agreement as of December 30, 2023, we may have outstanding revolver loan debt in the future.
There can be no assurance that we would be able to raise such additional financing or engage in such asset sales on acceptable terms, or at all, or that we would be able to modify our existing Credit Agreement.
Negative commentary regarding us or the brands that we sell may be posted on social media platforms or similar devices at any time and may harm our reputation or business.
Negative commentary regarding us or the brands that we sell may be posted on social media platforms or similar devices at any time and may harm our reputation or business. Consumers value readily available information concerning retailers and their goods and services and often act on such information without further investigation and without regard to its accuracy.
Risks Related To Our Capital Stock Our common stock price has been and may continue to be volatile, which may result in losses to our stockholders. The market prices of technology and eCommerce companies generally have been extremely volatile and have recently experienced sharp share price and trading volume changes.
The market prices of technology and eCommerce companies generally have been extremely volatile and have recently experienced sharp share price and trading volume changes.
Any inability to offer a broad array of products at competitive prices and any failure to deliver those products to our customers in a timely and accurate manner may damage our reputation and brand and could cause us to lose customers and our sales could decline.
Any inability to offer a broad array of products at competitive prices and any failure to deliver those products to our customers in a timely and accurate manner may damage our reputation and brand and could cause us to lose customers and our sales could decline. 14 Table of Contents In addition, the increasing consolidation among auto parts suppliers may disrupt or end our relationship with some suppliers, result in product shortages and/or lead to less competition and, consequently, higher prices.
In addition, at the state level, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
If any of these events occur, we may not derive some or all of the expected benefits from our NOLs. In addition, at the state level there may be periods during which the use of NOLs is suspended or otherwise limited, which would accelerate or may permanently increase state taxes owed.
We may be unable to protect these domain names or acquire or maintain relevant domain names in the United States and in other countries. If we are not able to protect our trademarks, domain names or other intellectual property, we may experience difficulties in achieving and maintaining brand recognition and customer loyalty.
We may be unable to protect these domain names or acquire or maintain relevant domain names in the United States and in other countries.
In addition, social media platforms provide users with access to such a broad audience that collective action against our website and marketplace stores, such as boycotts, can be more easily organized. If such actions were organized, we could suffer reputational damage as well as physical damage to our stores and merchandise.
The harm may be immediate without affording us an opportunity for redress or correction. In addition, social media platforms provide users with access to such a broad audience that collective action against our website and marketplace stores, such as boycotts, can be more easily organized.
Moreover, if we fail to collect and remit or pay required sales or other taxes in a jurisdiction, or qualify or register to do business in a jurisdiction that requires us to do so or if we have failed to do so in the past, we could face material liabilities for taxes, fees, interest and penalties.
Moreover, if we fail to collect and remit or pay required sales or other taxes in a jurisdiction, or qualify or register to do business in a jurisdiction that requires us to do so or if we have failed to do so in the past, we could face material liabilities for taxes, fees, interest and penalties. 18 Table of Contents If we are unable to substantially utilize our net operating loss (“NOLs”) carry-forwards, our financial results may be adversely affected, and protections implemented by us to preserve our NOLs may have unintended anti-takeover effects. ​ As of December 28, 2024, our NOL carryforwards for federal and state were $127,019 and $93,822, respectively.
In addition, there can be no guarantee that repurchases made under our share repurchase program, if any, will enhance shareholder value. Future capital raises may dilute our existing stockholders’ ownership. If we raise additional capital by issuing equity securities, our existing stockholders’ percentage ownership may decrease, and these stockholders may experience substantial dilution. ITEM 1B.
In addition, there can be no guarantee that repurchases made under our share repurchase program, if any, will enhance shareholder value. As of December 28, 2024, the Company remained authorized to repurchase up to approximately $25,234 in shares of its common stock. Future capital raises may dilute our existing stockholders’ ownership.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, a corporation that undergoes an “ownership change” (generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period) is subject to limitations on its ability to utilize its pre-ownership change NOL carryforwards to offset post-ownership change income.
Under Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income.
Throughout 2018 and 2019, the U.S. imposed tariffs on imports from several countries, including China.
Throughout 2018 and 2019, and just recently in 2025, the U.S. imposed tariffs on imports from several countries, including China. In February 2025, the U.S. administration announced increased tariff on imports from China, where a significant portion of our products are sourced. Following the U.S. administration’s announcements, China has also announced corresponding retaliatory tariff measures.
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Risks Related To Our Capital Stock ● Our common stock price may continue to be volatile, which may result in losses to our stockholders. ● Our future operating results may fluctuate and may fail to meet market expectations. 7 Table of Contents ● Failure to maintain an effective system of internal control over financial reporting or comply with Section 404 of the Sarbanes-Oxley Act of 2002 could cause our stock price to decline. ● Our charter documents could deter a takeover effort, which could inhibit your ability to receive an acquisition premium for your shares. ● We do not intend to pay dividends on our common stock. ● We cannot guarantee that our share repurchase program will enhance shareholder value and share repurchases could affect the price of our common stock. ● Future capital raises may dilute our existing stockholders’ ownership.
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Our preliminary exploration of potential strategic alternatives may not be successful, resulting in our needing to explore potential alternatives that may materially adversely affect the value of our business and our stock price. ​ We regularly engage in dialogue with market participants regarding potential business combinations, partnerships and other strategic alternatives.
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Purchasers of aftermarket auto parts may not choose to shop online, which would prevent us from acquiring new customers who are necessary to the growth of our business.
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Based on certain recent preliminary inquiries, we engaged a financial advisor to support our Board in evaluating any indications of interest and exploring other potential strategic alternatives.
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A prolonged future outbreak from COVID-19, or another pandemic and its effects, potentially could affect future years. ​ The COVID-19 pandemic has had, and may continue to have, negative impacts on economic conditions in the United States and worldwide.
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There can be no assurance that any of such preliminary exploratory activities will result in our engaging in a strategic alternative transaction, or even if we do so, that any such strategic alternative transaction will result in favorable terms and conditions for us or our shareholders.
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In addition, the increasing consolidation among auto parts suppliers may disrupt or end our relationship with some suppliers, result in product shortages and/or lead to less competition and, consequently, higher prices. Furthermore, as part of our routine business, suppliers extend credit to us in connection with our purchase of their products.
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If we are unsuccessful in engaging in a favorable strategic alternative, then we may need to pursue potential alternatives.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAlthough we did not pay the ransomware and did not incur any fines or settlements, we did incur out of pocket expenses costs related to this incident of $100,000. We have not encountered any other cybersecurity challenges that have materially impaired our operations or business.
Biggest changeAlthough we did not pay the ransomware and did not incur any fines or 30 Table of Contents settlements, we did incur out of pocket expenses costs related to this incident of $100,000. We have not encountered any other cybersecurity challenges that have materially impaired our operations or business.
Specific cybersecurity briefing areas may include topics such as security, infrastructure, 28 Table of Contents cybersecurity tooling/applications, and compliance. ​
Specific cybersecurity briefing areas may include topics such as security, infrastructure, cybersecurity tooling/applications, and compliance. ​

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES As of December 30, 2023, the total square footage of our leased office and distribution centers was 1,203,000 square feet. This includes approximately 1,187,000 square feet for our corporate headquarters located in Torrance, California and distribution centers in Illinois, Virginia, Nevada, Texas and Florida; and approximately 16,000 square feet of office space in the Philippines.
Biggest changeITEM 2. PROPERTIES As of December 28, 2024, the total square footage of our leased office and distribution centers was 1,281,000 square feet. This includes approximately 1,265,000 square feet for our corporate headquarters located in Torrance, California and distribution centers in Illinois, Virginia, Nevada, Texas and Florida; and approximately 16,000 square feet of office space in the Philippines.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor an additional discussion of certain risks associated with legal proceedings, see the section entitled “ Risk Factors ” in Item 1A of this report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 29 Table of Contents PART II
Biggest changeFor an additional discussion of certain risks associated with legal proceedings, see the section entitled “ Risk Factors ” in Item 1A of this report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 31 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. ​ Mine Safety Disclosures ​ 29 ​ ​ ​ ​ ​ ​ ​ PART II ​ 30 ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 30
Biggest changeItem 4. ​ Mine Safety Disclosures ​ 31 ​ ​ ​ ​ ​ ​ ​ PART II ​ 32 ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 32

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny future determination to pay cash dividends on our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, any Credit Agreement restrictions, and other factors the Board of Directors deems relevant. Recent Sales of Unregistered Securities None.
Biggest changeAny future determination to pay cash dividends on our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements, any Credit Agreement restrictions, and other factors the Board of Directors deems relevant. Recent Sales of Unregistered Securities None. Recent Purchases of Equity Securities None.
Dividend Policy No dividends on common stock were paid during the fiscal year ended December 30, 2023. We do not anticipate that we will declare or pay any cash dividends on our common stock in the foreseeable future.
Dividend Policy No dividends on common stock were paid during the fiscal year ended December 28, 2024. We do not anticipate that we will declare or pay any cash dividends on our common stock in the foreseeable future.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on NASDAQ under the symbol “PRTS.” Holders As of February 29, 2024, there were approximately 5 registered stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on NASDAQ under the symbol “PRTS.” Holders As of March 18, 2025, there were approximately 7 registered stockholders of record of our common stock.
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Recent Purchases of Equity Securities On July 27, 2021, our Board of Directors authorized a stock repurchase program under which the Company may purchase up to $30 million of our common stock from time to time.
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Stock Performance Graph As a smaller reporting company, we are not required to provide the information requested by this item pursuant to Item 201(e) of Regulation S-K. ​ ITEM 6. [RESERVED] ​ ​
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The repurchases of common stock may be executed through open market purchases, block trades, the implementation of a 10b5-1 plan, and/or any other available methods.
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A summary of our common stock repurchases during the thirteen weeks ended December 30, 2023 is set forth in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ ​ ​ ​ ​ ​ ​ As Part of ​ Approximate Dollar Value ​ ​ Total Number of ​ ​ ​ Publicly Announced ​ of Shares That May Yet ​ ​ Shares Purchased ​ Average Price ​ Plans or Programs ​ Be Purchased Under the ​ ​ (in thousands) ​ Paid per Share ​ (in thousands) ​ Plans or Programs (in thousands) October 1, 2023 - October 28, 2023 ​ — $ — ​ N/A $ 27,379 October 29, 2023 - November 25, 2023 ​ 712 $ 2.95 ​ 712 $ 25,279 November 26, 2023 - December 30, 2023 ​ 14 $ 3.05 ​ 14 $ 25,234 Total ​ 726 ​ ​ ​ 726 ​ ​ ​ Stock Performance Graph The following graph compares the performance of our common stock with that of the Russell 2000 Index and the NASDAQ Composite Index for the five-year period beginning on December 28, 2018 and ending on December 29, 2023, the last business day prior to each fiscal year-end date. 30 Table of Contents We caution that historic performance of our common stock is not necessarily indicative of future stock price performance. ​ ITEM 6. [RESERVED] ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA similar discussion and analysis which compares fiscal year 2022 to fiscal year 2021 may be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report filed with the SEC pursuant to Section 13 or 15(d) under the Exchange Act on March 8, 2023. 34 Table of Contents Results of Operations The following table sets forth our results of operations for the fiscal years presented, expressed as a percentage of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 30, 2023 December 31, 2022 January 1, 2022 ​ Net sales 100.0 % 100.0 % 100.0 % Cost of sales 66.1 65.1 66.1 ​ Gross profit 33.9 34.9 33.9 ​ Operating expense 35.4 34.8 35.4 ​ (Loss) income from operations (1.5) 0.1 (1.5) ​ Other income (expense): ​ Other income, net ​ 0.5 ​ 0.1 ​ 0.0 ​ Interest expense (0.2) (0.2) (0.2) ​ Total other income (expense), net 0.3 (0.1) (0.2) ​ Loss before income taxes (1.2) (0.0) (1.7) ​ Income tax provision 0.0 0.1 0.1 ​ Net loss (1.2) % (0.1) % (1.8) % ​ Fifty-Two Weeks Ended December 30, 2023 Compared to the Fifty-Two Weeks Ended December 31, 2022 Net Sales and Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 30, 2023 December 31, 2022 $ Change % Change ​ ​ (in thousands) ​ ​ ​ ​ Net sales ​ $ 675,729 $ 661,604 $ 14,125 2.1 % Cost of sales ​ 446,323 430,714 15,609 3.6 % Gross profit ​ $ 229,406 $ 230,890 $ (1,484) (0.6) % Gross margin ​ 33.9 % 34.9 % ​ ​ ​ (1.0) % ​ Net sales increased $14,125, or 2.1%, for fiscal year 2023 compared to fiscal year 2022 primarily driven by continued demand.
Biggest changeResults of Operations The following table sets forth our results of operations for the fiscal years presented, expressed as a percentage of net sales: ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ December 28, 2024 December 30, 2023 Net sales 100.0 % 100.0 % Cost of sales 66.6 66.1 Gross profit 33.4 33.9 Operating expense 40.3 35.4 Loss from operations (6.9) (1.5) Other income (expense): Other income, net ​ 0.2 ​ 0.5 ​ Interest expense (0.2) (0.2) Total other income, net (0.0) 0.3 Loss before income taxes (6.9) (1.2) Income tax provision 0.0 0.0 Net loss (6.9) % (1.2) % ​ Fifty-Two Weeks Ended December 28, 2024 Compared to the Fifty-Two Weeks Ended December 30, 2023 Net Sales and Gross Margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 28, 2024 December 30, 2023 $ Change % Change ​ ​ (in thousands) ​ ​ ​ ​ Net sales ​ $ 588,846 $ 675,729 $ (86,883) (12.9) % Cost of sales ​ 392,107 446,323 (54,216) (12.1) % Gross profit ​ $ 196,739 $ 229,406 $ (32,667) (14.2) % Gross margin ​ 33.4 % 33.9 % ​ ​ ​ (0.5) % ​ Net sales decreased $86,883, or 12.9%, for fiscal year 2024 compared to fiscal year 2023 primarily driven by the continued challenging consumer environment and our re-pricing strategy to focus on higher value customers.
We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,047,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods. 2. U.S. vehicle fleet expanding and aging.
We believe our user-friendly flagship website, and app, provides customers with a favorable alternative to the brick-and-mortar shopping experience by offering a comprehensive selection of approximately 1,544,000 SKUs with detailed product descriptions, attributes and photographs combined with the flexibility of fulfilling orders using both drop-ship and stock-and-ship methods. 2. U.S. vehicle fleet expanding and aging.
Our offline sales channel 33 Table of Contents also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which include the replacement collision parts and our Kool-Vue ® mirror line. Cost of Sales.
Our offline sales channel also includes both stock ship distribution as well as drop ship programs for automotive warehouse distributors and other online resellers. The product mix includes the majority of our house brands stock ship parts, which include the replacement collision parts and our Kool-Vue ® mirror line. Cost of Sales.
The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.5 years in 2023, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs.
The average age of U.S. light vehicles, an indicator of auto parts demand, reached a new record-high of 12.6 years in 2024, according to the U.S. Auto Care Association. We believe an increasing vehicle base and rising average age of vehicles will have a positive impact on overall aftermarket parts demand because older vehicles generally require more repairs.
Under the terms of the 37 Table of Contents Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement.
Under the terms of the Credit Agreement, cash receipts are deposited into a lock-box, which are at the Company’s discretion unless the “cash dominion period” is in effect, during which cash receipts will be used to reduce amounts owing under the Credit Agreement.
Based on our current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “ Debt and Available Borrowing Resources ” and “ Funding Requirements ” below).
Based on our 37 Table of Contents current operating plan, we believe that our existing cash and cash equivalents, investments, cash flows from operations and available funds under our Credit Facility will be sufficient to finance our operations through at least the next twelve months (see “ Debt and Available Borrowing Resources ” and “ Funding Requirements ” below).
Presentation of Results of Operations and Liquidity and Capital Resources The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of fiscal year 2023 to fiscal year 2022.
Presentation of Results of Operations and Liquidity and Capital Resources The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of fiscal year 2024 to fiscal year 2023.
Other income, net primarily consists of miscellaneous income or expense and interest income comprised primarily of interest income on investments. Interest Expense. Interest expense consists primarily of interest expense on our outstanding revolving loan and letters of credit balances, deferred financing cost amortization and finance lease interest.
Other income, net primarily consists of miscellaneous income or expense and interest income comprised primarily of interest income on investments. 35 Table of Contents Interest Expense. Interest expense consists primarily of interest expense on our outstanding revolving loan and letters of credit balances, deferred financing cost amortization and finance lease interest.
We purchase inventory from suppliers both domestically and internationally, primarily in Taiwan and China. Inventory is accounted for using the first-in first-out (“FIFO”) method and valued at the lower of cost or net realizable value.
Valuation of Inventory – Inventory Reserve. Inventory primarily consists of finished goods. We purchase inventory from suppliers both domestically and internationally, primarily in Taiwan and China. Inventory is accounted for using the first-in first-out (“FIFO”) method and valued at the lower of cost or net realizable value.
Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach approximately $21 billion by 2025. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales.
Auto Care Association estimated that overall revenue from online sales of auto parts and accessories would reach over $23 billion by 2026. Improved product availability, lower prices and consumers’ growing comfort with digital platforms are driving the shift to online sales.
Investing Activities For the fiscal years ended December 30, 2023 and December 31, 2022, net cash used in investing activities was primarily the result of additions to property and equipment ($11,879 and $12,585, respectively), which are mainly related to capitalized website and software development costs.
For the fiscal year ended December 30, 2023, net cash used in investing activities was primarily the result of additions to property and equipment of $11,879, which are mainly related to capitalized website and software development costs.
Online and offline sales represent two different sales channels for our products. Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website at www.carparts.com , our app, and online marketplaces.
Online is our primary sales channel as we generate net sales primarily from eCommerce sales of auto parts to individual consumers through our mobile-friendly website at www.carparts.com , our app, and online marketplaces.
These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the GAAP results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company’s business and results of operations.
These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with the accounting principles generally accepted in the United States (“GAAP”) results and the accompanying reconciliation to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company’s business and results of operations.
As of December 30, 2023, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $38,458 against deferred tax assets that were not more likely than not to be realized.
As of December 28, 2024, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $45,463 against deferred tax assets that were not more likely than not to be realized.
As of December 30, 2023, the Company’s SOFR based interest rate was 7.45% and the Company’s prime based rate was 9.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly.
As of December 28, 2024, the Company’s SOFR based interest rate was 6.46% and the Company’s prime based rate was 8.00%. A commitment fee, based upon undrawn availability under the Credit Facility bearing interest at a rate of either 0.20% or 0.25% per annum based on the amount of undrawn availability, is payable monthly.
You are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management’s opinions only as of the date thereof. We do not assume any obligation to revise or update forward-looking statements.
You are cautioned not to place undue reliance on these forward-looking statements, which are based on current expectations and reflect management’s opinions only as of the date thereof. We do not assume any obligation to revise or update forward-looking statements. Finally, our historic results should not be viewed as indicative of future performance.
As of December 30, 2023 and December 31, 2022, our outstanding revolving loan balance was $0, respectively. The outstanding standby letters of credit balance as of December 30, 2023 and December 31, 2022 was $680 and $620, respectively, and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets.
As of December 28, 2024 and December 30, 2023, our outstanding revolving loan balance was $0, respectively. The outstanding standby letters of credit balance as of December 28, 2024 and December 30, 2023 was $680, respectively, 38 Table of Contents and we had $0 of our trade letters of credit outstanding in accounts payable in our consolidated balance sheets.
We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces. Executive Summary For fiscal year 2023, the Company’s operations generated net sales of $675,729, compared to $661,604 for fiscal year 2022, representing an increase of 2.1%.
We believe that we are well positioned for the shift to online sales due to being a leading source for aftermarket automotive parts through our flagship website, app, and online marketplaces. Executive Summary For fiscal year 2024, the Company’s operations generated net sales of $588,846, compared to $675,729 for fiscal year 2023, representing a decrease of 12.9%.
The Company incurred a net loss of $8,223 for fiscal year 2023 compared to a net loss of $951 for fiscal year 2022.
The Company incurred a net loss of $40,601 for fiscal year 2024 compared to a net loss of $8,223 for fiscal year 2023.
Income Tax Provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 30, 2023 December 31, 2022 $ Change % Change ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Income tax provision ​ $ 145 ​ $ 632 ​ $ (487) (77.1) % Percent of net sales ​ 0.0 % 0.1 % (0.1) % ​ The Company accounts for income taxes in accordance with ASC 740 - Income Taxes (“ASC 740”).
Income Tax Provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 28, 2024 December 30, 2023 $ Change % Change ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ Income tax provision ​ $ 267 ​ $ 145 ​ $ 122 84.1 % Percent of net sales ​ 0.0 % 0.0 % 0.0 % ​ The Company accounts for income taxes in accordance with ASC 740 - Income Taxes (“ASC 740”).
Debt and Available Borrowing Resources Total debt was $16,635 as of December 30, 2023 compared to $20,669 as of December 31, 2022 and primarily consists of right-of-use obligations-finance.
Debt and Available Borrowing Resources Total debt was $12,313 as of December 28, 2024 compared to $16,635 as of December 30, 2023 and primarily consists of right-of-use obligations-finance.
The increase in net cash provided by operating activities was primarily driven by a higher net cash inflow from the change in working capital.
The decrease in net cash provided by operating activities was primarily driven by a lower net cash inflow from the change in working capital, in addition to the higher net loss for 2024.
Liquidity and Capital Resources Sources of Liquidity During the fifty-two weeks ended December 30, 2023, we primarily funded our operations with cash and cash equivalents generated from operations. We had cash and cash equivalents of $50,951 as of December 30, 2023, representing a $32,184 increase from $18,767 of cash and cash equivalents as of December 31, 2022.
Liquidity and Capital Resources Sources of Liquidity During the fifty-two weeks ended December 28, 2024, we primarily funded our operations with cash and cash equivalents generated from operations. We had cash and cash equivalents of $36,397 as of December 28, 2024, representing a $14,554 decrease from $50,951 of cash and cash equivalents as of December 30, 2023.
As of December 30, 2023, the Company had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of December 30, 2023, the Company’s federal and state NOL carryforwards were $105,224 and $84,780, respectively.
As of December 28, 2024, the Company had no material unrecognized tax benefits, interest or penalties related to federal and state income tax matters. As of December 28, 2024, the Company’s federal and state NOL carryforwards were $127,019 and $93,822, respectively.
The Company’s net loss before interest (income) expense, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, share-based compensation expense ("Adjusted EBITDA"), was $19,687 in fiscal year 2023 compared to $26,113 in fiscal year 2022.
The Company’s net loss before interest (income) expense, net, income tax provision, depreciation and amortization expense, amortization of intangible assets, share-based compensation expense, workforce transition costs, and distribution center costs ("Adjusted EBITDA"), was $(7,055) in 33 Table of Contents fiscal year 2024 compared to $19,687 in fiscal year 2023.
We believe that of our significant accounting policies, which are described in Note 1 – Summary of Significant Accounting Policies and Nature of Operations” of the Notes to Consolidated Financial Statements, the following accounting policies and estimates set forth below involve a greater degree of judgment or complexity. Valuation of Inventory – Inventory Reserve. Inventory primarily consists of finished goods.
Actual results could differ from those estimates under different assumptions and conditions. We believe that of our significant accounting policies, which are described in Note 1 – Summary of Significant Accounting Policies and Nature of Operations” of the Notes to Consolidated Financial Statements, the following accounting policies and estimates set forth below involve a greater degree of judgment or complexity.
The information contained in this section is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC, which are available on the SEC’s website at http://www.sec.gov.
We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC, which are available on the SEC’s website at http://www.sec.gov.
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Actual results could differ from those estimates under different assumptions and conditions.
Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, net sales, costs and expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis.
Refer to the section below titled “ Non-GAAP measures ” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss. Net sales increased in fiscal year 2023 compared to fiscal year 2022 primarily driven by continued demand. Gross profit decreased by 0.6% to $229,406.
Refer to the section below titled “ Non-GAAP measures ” for information regarding our use of Adjusted EBITDA and a reconciliation from net loss. Net sales decreased in fiscal year 2024 compared to fiscal year 2023 primarily driven by the continued challenging consumer environment and our re-pricing strategy to focus on higher value customers.
We believe disintermediating the traditional auto parts supply chain and selling products directly to customers online allows us to efficiently deliver products to our customers. Industry-wide trends that support our strategy and future growth include: 1. Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years.
Industry-wide trends that support our strategy and future growth include: 1. Number of SKUs required to serve the market. The number of automotive SKUs has grown dramatically over the last several years.
We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures. EBITDA consists of net loss before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense.
EBITDA consists of net loss before (a) interest (income) expense, net; (b) income tax provision; (c) depreciation and amortization expense; and (d) amortization of intangible assets; while Adjusted EBITDA consists of EBITDA before share-based compensation expense, workforce transition costs, and distribution center costs. The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors.
We principally sell our products to individual consumers through our flagship website at www.carparts.com , our app, and online marketplaces. Our corporate website is located at www.carparts.com /investor . The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites.
Our corporate website is located at www.carparts.com /investor . The inclusion of our website addresses in this report does not include or incorporate by reference into this report any information on our websites. We believe disintermediating the traditional auto parts supply chain and selling products directly to customers online allows us to efficiently deliver products to our customers.
Total expenses, which primarily consisted of cost of sales and operating expense, increased in fiscal year 2023 compared to the same period in 2022.
Total expenses, which primarily consisted of cost of sales and operating expense, increased in fiscal year 2024 compared to the same period in 2023. The components of cost of sales and operating costs are described in further detail under “Components of Results of Operations ” below.
Financing Activities Net cash used in financing activities was $5,916 and $2,153 for the fiscal years ended December 30, 2023 and December 31, 2022, respectively. The increase was primarily attributable to the repurchase of treasury stock in the fiscal year ended December 30, 2023.
Financing Activities Net cash used in financing activities was $4,422 and $5,916 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively. The decrease was primarily attributable to the absence of proceeds from the exercise of stock options in 2024.
Certain statements in this report, including statements regarding our business strategies, operations, financial condition, and prospects are forward-looking statements. Use of the words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” “will likely continue,” “will likely result” and similar expressions that contemplate future events may identify forward-looking statements.
Use of the words “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” “will likely continue,” “will likely result” and similar expressions that contemplate future events may identify forward-looking statements. 32 Table of Contents The information contained in this section is not a complete description of our business or the risks associated with an investment in our common stock.
There can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all.
There can be no assurance that we would be able to raise such additional financing or engage in asset sales on acceptable terms, or at all. If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations.
Funding Requirements Based on our current operating plan, we believe that our existing cash, cash equivalents, investments, cash flows from operations and available debt or equity financing will be sufficient to finance our operational cash needs through at least the next twelve months. Our future capital requirements may, however, vary materially from those now planned or anticipated.
See additional information in “Note 4 – Borrowings” in the Notes to the Consolidated Financial Statements included in Part II, Item 8, of this report. 39 Table of Contents Funding Requirements Based on our current operating plan, we believe that our existing cash, cash equivalents, investments, cash flows from operations and available debt or equity financing will be sufficient to finance our operational cash needs through at least the next twelve months.
The components of cost of sales and operating costs are described in further detail under “Components of Results of Operations ” below. 32 Table of Contents Non-GAAP measures Regulation G, “Conditions for Use of Non-GAAP Financial Measures ,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information.
Non-GAAP measures Regulation G, “Conditions for Use of Non-GAAP Financial Measures ,” and other provisions of the Exchange Act, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide EBITDA and Adjusted EBITDA, which are non-GAAP financial measures.
It includes many categories, geographies, and channels which may experience seasonality from time to time based on various external factors. Additionally, seasonality may affect our product mix. These historical seasonality trends could continue, and such trends may have a material impact on our financial condition and results of operations in subsequent periods.
Seasonality We believe our business is somewhat seasonal in nature. It includes many categories, geographies, and channels which may experience seasonality from time to time based on various external factors. Additionally, seasonality may affect our product mix.
Finally, our historic results should not be viewed as indicative of future performance. 31 Table of Contents Overview We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and performance parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years.
Overview We are a leading online provider of aftermarket auto parts, including replacement parts, hard parts, and other parts and accessories. Our proprietary product database maps our SKUs to product applications based on vehicle makes, models and years. We principally sell our products to individual consumers through our flagship website at www.carparts.com , our app, and online marketplaces.
Recent Accounting Pronouncements See “ Note 1 – Summary of Significant Accounting Policies and Nature of Operations” of the Notes to Consolidated Financial Statements, included in Part IV, Item 15 of this report. Critical Accounting Policies and Estimates Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
These historical seasonality trends could continue, and such trends may have a material impact on our financial condition and results of operations in subsequent periods. Recent Accounting Pronouncements See “ Note 1 – Summary of Significant Accounting Policies and Nature of Operations” of the Notes to Consolidated Financial Statements, included in Part IV, Item 15 of this report.
Gross margin decreased 100 basis points to 33.9% in fiscal year 2023 compared to 34.9% in fiscal year 2022. The decrease in gross margin was primarily driven by unfavorable freight costs and a shift in product mix.
Gross profit decreased by 14.2% to $196,739. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023. The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy.
As of December 30, 2023 and December 31, 2022, our working capital was $80,352 and $79,843, respectively. 36 Table of Contents Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ December 30, 2023 December 31, 2022 January 1, 2022 Net cash provided by (used in) operating activities ​ $ 50,001 ​ $ 15,368 $ (6,988) Net cash used in investing activities ​ (11,901) ​ (12,517) (11,551) Net cash (used in) provided by financing activities ​ (5,916) ​ (2,153) 902 Effect of exchange rate changes on cash ​ — ​ (75) (21) Net change in cash and cash equivalents ​ $ 32,184 ​ $ 623 $ (17,658) ​ Operating Activities Net cash provided by operating activities for the fiscal years ended December 30, 2023 and December 31, 2022 was $50,001 and $15,368, respectively.
Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ December 28, 2024 December 30, 2023 Net cash provided by operating activities ​ $ 10,338 ​ $ 50,001 Net cash used in investing activities ​ (20,557) ​ (11,901) Net cash used in financing activities ​ (4,422) ​ (5,916) Effect of exchange rate changes on cash ​ 87 ​ — Net change in cash and cash equivalents ​ $ (14,554) ​ $ 32,184 ​ Operating Activities Net cash provided by operating activities for the fiscal years ended December 28, 2024 and December 30, 2023 was $10,338 and $50,001, respectively.
The increase in operating expense was primarily driven by investments in our business, combined with higher advertising expense, partially offset by a decrease in fulfillment expense primarily due to an improvement in distribution center fulfillment costs. 35 Table of Contents Total Other Income (Expense), Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 30, 2023 December 31, 2022 $ Change % Change ​ (in thousands) ​ ​ ​ ​ ​ ​ Other income (expense), net ​ $ 1,803 ​ $ (970) ​ $ 2,773 (285.9) % Percent of net sales ​ 0.3 % (0.1) % ​ ​ 0.4 % ​ Total other income (expense), net, increased $2,773, or 285.9%, for fiscal year 2023 compared to fiscal year 2022 primarily driven by an increase in interest income due to higher interest rates and a higher cash balance during 2023.
Total Other Income, Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 28, 2024 December 30, 2023 $ Change % Change ​ (in thousands) ​ ​ ​ ​ ​ ​ Total other income, net ​ $ 301 ​ $ 1,803 ​ $ (1,502) (83.3) % Percent of net sales ​ (0.0) % 0.3 % ​ ​ (0.3) % ​ Total other income, net, decreased $1,502, or 83.3%, for fiscal year 2024 compared to fiscal year 2023 primarily driven by a decrease in interest income due to a lower cash balance during 2024.
Operating Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 30, 2023 December 31, 2022 $ Change % Change ​ (in thousands) ​ ​ Operating expense ​ $ 239,287 ​ $ 230,239 ​ $ 9,048 3.9 % Percent of net sales ​ 35.4 % 34.8 % 0.6 % ​ Operating expense increased $9,048, or 3.9%, for fiscal year 2023 compared to fiscal year 2022.
The decrease in gross margin was primarily driven by unfavorable freight costs, partially offset by our re-pricing strategy. 36 Table of Contents Operating Expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ ​ ​ ​ December 28, 2024 December 30, 2023 $ Change % Change ​ (in thousands) ​ ​ Operating expense ​ $ 237,374 ​ $ 239,287 ​ $ (1,913) (0.8) % Percent of net sales ​ 40.3 % 35.4 % 4.9 % ​ Operating expense decreased $1,913, or 0.8%, for fiscal year 2024 compared to fiscal year 2023.
As of December 30, 2023, the Company was in compliance with all covenants under the Credit Agreement. See additional information in “Note 4 – Borrowings” in the Notes to the Consolidated Financial Statements included in Part II, Item 8, of this report.
As of December 28, 2024, the Company was in compliance with all covenants under the Credit Agreement.
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The Company believes that these non-GAAP financial measures provide important supplemental information to management and investors.
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Certain statements in this report, including statements regarding our business strategies, operations, financial condition, and prospects are forward-looking statements.
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In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company’s non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.
Added
In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company’s non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. 34 Table of Contents The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 28, 2024 ​ December 30, 2023 Net loss ​ $ (40,601) ​ $ (8,223) Depreciation & amortization ​ 18,975 ​ 16,690 Amortization of intangible assets ​ 121 ​ 36 Interest (income) expense, net ​ (301) ​ (636) Income tax provision ​ 267 ​ 145 EBITDA ​ $ (21,539) ​ $ 8,012 Stock compensation expense ​ $ 11,985 ​ $ 11,675 Workforce transition costs (1) ​ ​ 617 ​ ​ — Distribution center costs (2) ​ ​ 1,882 ​ ​ — Adjusted EBITDA ​ $ (7,055) ​ $ 19,687 (1) We incurred workforce transition costs, primarily related to severance, as part of our recent workforce reductions.
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The table below reconciles net loss to Adjusted EBITDA for the periods presented (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 30, 2023 ​ December 31, 2022 ​ January 1, 2022 Net loss ​ $ (8,223) ​ $ (951) ​ $ (10,339) Depreciation & amortization ​ 16,690 ​ 13,607 ​ 9,895 Amortization of intangible assets ​ 36 ​ 108 ​ 110 Interest (income) expense, net ​ (636) ​ 1,421 ​ 1,089 Income tax provision ​ 145 ​ 632 ​ 351 EBITDA ​ $ 8,012 ​ $ 14,817 ​ $ 1,106 Stock compensation expense ​ $ 11,675 ​ $ 11,296 ​ $ 15,685 Adjusted EBITDA ​ $ 19,687 ​ $ 26,113 ​ $ 16,791 ​ Components of Results of Operations Net Sales.
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(2) We incurred certain non-recurring costs, primarily overlapping rent expense, attributable to moving to our new Las Vegas, Nevada distribution center. ​ Components of Results of Operations Net Sales. Online and offline sales represent two different sales channels for our products.
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Gross profit decreased $1,484, or 0.6%, in fiscal year 2023 compared to fiscal year 2022. Gross margin decreased 100 basis points to 33.9% in fiscal year 2023 compared to 34.9% in fiscal year 2022. The decrease in gross margin was primarily driven by unfavorable freight costs and a shift in product mix.
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A similar discussion and analysis which compares fiscal year 2023 to fiscal year 2022 may be found in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report filed with the SEC pursuant to Section 13 or 15(d) under the Exchange Act on March 8, 2024.
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If we are not able to raise adequate additional financing or proceeds from asset sales, we will need to defer, reduce or eliminate significant planned expenditures, restructure or significantly curtail our operations. 38 Table of Contents Seasonality We believe our business is somewhat seasonal in nature.
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Gross profit decreased $32,667, or 14.2%, in fiscal year 2024 compared to fiscal year 2023. Gross margin decreased 50 basis points to 33.4% in fiscal year 2024 compared to 33.9% in fiscal year 2023.
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Operating expense as a percent of net sales increased 4.9% to 40.3% in fiscal year 2024, mainly attributable to investments in our business, such as brand and marketing investments and one-time costs related to the move to the new Las Vegas distribution center, in addition to an unfavorable marketing spend.
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As of December 28, 2024 and December 30, 2023, our working capital was $48,445 and $80,352, respectively.
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Investing Activities For the fiscal year ended December 28, 2024, net cash used in investing activities was primarily the result of additions to property and equipment of $20,573, which are mainly related to capitalized website and software development costs and machinery and equipment additions, primarily related to the new Las Vegas distribution center.
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Our future capital requirements may, however, vary materially from those now planned or anticipated.
Added
Impairment of Long-Lived Assets. We assess potential impairments whenever events or changes in circumstances indicate that the carrying value of our long-lived assets, or asset group, may not be recoverable. If an indicator of impairment exists, we review the recoverability of our long-lived assets by estimating the undiscounted future cash flows compared to the carrying value of such assets.
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An impairment loss will result when the carrying value of the asset group exceeds the undiscounted future cash flows of the asset group. Impairment losses will be recognized in operating results. No impairment charges were recorded for the fiscal years ended December 28, 2024 and December 30, 2023. 40 Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this Item 8 are set forth in Part IV, Item 15 of this report and are hereby incorporated into this Item 8 by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Biggest changeWe do not use derivative financial instruments to manage foreign currency risk but could choose to do so in the future. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required by this Item 8 are set forth in Part IV, Item 15 of this report and are hereby incorporated into this Item 8 by reference. ITEM 9.
Interest Rate Risk We are subject to interest rate risk in connection with our revolving loan under our Credit Facility, which bears an interest rate based on a SOFR, plus an applicable margin, and a prime based rate. As of December 30, 2023, we had a balance of $0 outstanding under our revolving loan.
Interest Rate Risk We are subject to interest rate risk in connection with our revolving loan under our Credit Facility, which bears an interest rate based on a SOFR, plus an applicable margin, and a prime based rate. As of December 28, 2024, we had a balance of $0 outstanding under our revolving loan.
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We do not use derivative financial instruments to manage foreign currency risk but could choose to do so in the future. 39 Table of Contents ITEM 8.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

Other PRTS 10-K year-over-year comparisons