Advance Auto Parts (AAP) has faced a challenging past couple of years, and its Q3 results did little to alleviate concerns. The company reported a net loss of ($0.82)/share, significantly lower than the positive EPS of $1.92 in the same period last year. AAP also announced a new cost reduction program, which is expected to generate at least $150 million in savings annually, as well as its intention to divest its Worldpac and Canadian businesses to reduce its exposure to commercial sales.

However, the market has responded positively to the news, as shares have rebounded after an initial decline. This is due in part to the belief that Q3 represented the kitchen sink quarter, in which all the bad news was disclosed, paving the way for improved results in the quarters ahead.

AAP's CEO, Shane O'Kelly, who joined the company in late August, has been transparent about the company's next steps in its turnaround effort. O'Kelly, who came over from Home Depot (HD) subsidiary HD Supply, has announced a new cost reduction program and the divestment of the company's Worldpac and Canadian businesses.

AAP also appointed Ryan Grimsland as its new Executive Vice President and CFO. Grimsland, who most recently served as Senior Vice President, Strategy and Transformation, at Lowe's (LOW), will help lead the sales process and AAP's overall turnaround strategy. With the company's top two positions now filled by former HD and LOW executives, there is hope that AAP can learn from the successes of these companies in navigating macroeconomic headwinds.

Despite the challenges facing AAP, the company's FY23 revenue outlook remains unchanged at $11.25-$11.30 billion, with the high end of the range down only modestly from $11.25-$11.35 billion. However, AAP's EPS guidance has been significantly revised downwards to $1.40-$1.80, down sharply from its prior guidance of $4.50-$5.10. This revision is partly due to non-recurring Q3 expenses.

In conclusion, Advance Auto Parts has faced a difficult period in recent years, but its recent moves to cut costs and divest non-core businesses may pave the way for a gradual turnaround. With the appointment of new leadership and a clear strategy for recovery, the company's shares have rebounded after the Q3 results were announced. However, investors should continue to monitor the company's progress in executing its turnaround plan and improving its financial performance.

Helping to drive the turnaround feel, AAP shares have climbed back into positive territory as of midday.