Advance Auto Parts Q2 Operating Income Rises

26 August 1998

    ROANOKE, Va., Aug. 25 -- Advance Holding Corporation today
reported strong increases in sales and operating income for the fiscal second
quarter (12 weeks) and first half (28 weeks) ended July 18, 1998.
    Net sales for the 1998 second quarter were $255.0 million, an increase of
29.6% from the $196.7 million reported for the comparable 1997 period.  This
sales growth was due to an increase in comparable store net sales of 9.4%, as
well as new store openings and store maturation.  Operating profit for the
recent quarter rose 53.6% to $18.4 million, or 7.2% of net sales, compared
with $11.9 million, or 6.1% of net sales, for the year-earlier period.  EBITDA
(earnings before interest, taxes, depreciation and amortization), as adjusted,
was $25.0 million for the latest quarter, up 37.9%.  Primarily due to the
increase in interest expense resulting from Advance's recapitalization, net
income was $4.9 million for the 1998 second quarter, versus $6.1 million in
the 1997 period.
    "The positive trend in Advance's second quarter operating results
reflected strong same-store sales increases, solid contributions from our new
stores, and the leveraging of our fixed expenses," noted Garnett E. Smith,
President and Chief Executive Officer.  "For the fiscal year-to-date, we have
continued our successful growth strategy, opening 96 new stores, remodeling 25
stores and relocating four stores, bringing the total Advance Auto Parts store
network to 909 locations as of July 18, 1998.  These results reflect truly
outstanding performance by the entire Advance team.  We look forward to
further growth, as evidenced by our recently announced agreement to merge the
Western Auto subsidiary of Sears, Roebuck and Co. into Advance's operations."
    For the first half (28 weeks) of fiscal 1998, net sales were $544.0
million, up 24.8% from the $435.9 million reported for the same 1997 period.
The increase in comparable store net sales was 6.4%.  Operating profit for the
1998 first half was $31.7 million before non-recurring recapitalization
expenses, an increase of 42.6% compared with the $22.2 million recorded in the
year-earlier period.  (Including recapitalization expenses, 1998 first half
operating profit was $17.7 million.)  EBITDA, as adjusted, before
recapitalization expenses was $46.7 million for the recent period, rising
31.6% over the prior year.  Including the increase in interest expense and the
recapitalization expenses, net income was $2.6 million for the 1998 first
half, versus $11.0 million in the 1997 period.
    In a recapitalization completed in April 1998, a majority of the equity of
Advance was purchased by an investment group including Freeman Spogli & Co.
Incorporated, Ripplewood Holdings, L.L.C. and members of Advance's management.
     On August 17, 1998, Advance and Sears, Roebuck and Co. jointly announced
the signing of a definitive agreement under which the Western Auto subsidiary
of Sears will be merged into Advance.  The transaction, which is expected to
close by year-end subject to certain conditions, will give Advance a total of
more than 1,500 retail stores in 36 states, Puerto Rico and the U.S. Virgin
Islands; as well as nearly 800 `dealer' stores in 48 states, and revenues of
approximately $2.1 billion.
    Advance Holding Corporation, which operates Advance Auto Parts stores, is
one of the largest specialty retailers of automotive parts and accessories in
the U.S.  The Company serves the "do it yourself" market through more than 915
stores in 17 states, and also has a commercial delivery program serving the
"do it for me" market.  Advance has achieved significant store growth while
maintaining an operating strategy characterized by superior customer service,
broad selection of quality products, and sophisticated information technology
and logistics systems.
    Certain statements contained in this news release are forward-looking
statements.  These statements discuss, among other things, expected growth,
store development and expansion strategy, business strategies, future revenues
and future performance.  The forward-looking statements are subject to risks,
uncertainties and assumptions including, but not limited to, competitive
pressures, demand for the Company's products, the market for auto parts, the
economy in general, inflation, consumer debt levels, the weather, and other
risk factors listed from time to time in the Company's filings with the
Securities and Exchange Commission.  Actual results may materially differ
from anticipated results described in these forward-looking statements.

                 ADVANCE HOLDING CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Income
              For the Twelve and Twenty-Eight Week Periods Ended
                       July 18, 1998 and July 12, 1997
                            (dollars in thousands)
                                 (Unaudited)

                                Twelve Week           Twenty-Eight Week
                               Period Ended             Period Ended
                          07/18/98     07/12/97      07/18/98      07/12/97

    Net sales            $ 255,037     $ 196,729    $ 544,000     $ 435,880
    Cost of sales          156,448       121,338      332,825       268,198
    Gross profit            98,589        75,391      211,175       167,682
    Selling, general and
      administrative
      expenses              80,235        63,444      179,521       145,478
    Costs associated with the
      recapitalization of
      the Company               --            --       14,005            --
    Operating income        18,354        11,947       17,649        22,204

    Other income (expense):
    Interest expense       (9,509)       (1,467)     (12,850)       (3,463)
    Other                      321         (102)          317         (203)
    Total other expense,
      net                  (9,188)       (1,569)     (12,533)       (3,666)
    Income before income
      taxes                  9,166        10,378        5,116        18,538
    Income tax expense       4,241         4,245        2,543         7,583
    Net income             $ 4,925       $ 6,133      $ 2,573      $ 10,955


                 ADVANCE HOLDING CORPORATION AND SUBSIDIARIES

       Consolidated Balance Sheets -- July 18, 1998 and January 3, 1998
                (dollars in thousands, except per share data)

                                07/18/98                 01/03/98
                                            (Unaudited)
    Assets

    Current assets:
    Cash and cash equivalents    $ 44,790                $ 15,463
    Marketable securities              --                   2,025
    Receivables, primarily from
      vendors                      24,372                  19,108
    Trade receivables               5,325                   3,359
    Inventories                   348,523                 280,267
    Prepaid expenses and other
      current assets                5,056                   2,895
    Refundable income taxes         2,185                   1,765
    Total current assets          430,251                 324,882
    Property and equipment, net of
      accumulated amortization and
      depreciation of
      $89,910 and $77,940         143,176                 134,896
    Other assets, net of
      accumulated amortization of
      $668 and $0                  21,490                   2,054
                                $ 594,917               $ 461,832

    Liabilities and Stockholders' (Deficit) Equity

    Current liabilities:
      Bank overdrafts                $ --                 $ 6,970
      Borrowings secured by trade
        receivables                 5,325                   3,359
      Notes payable and current
        portion of long-term debt      --                   3,959
      Current portion of deferred
        revenue                     3,089                   1,530
      Accounts payable            216,832                 157,096
      Accrued expenses             53,634                  27,718
      Deferred income taxes         2,674                   3,110
      Total current liabilities   281,554                 203,742

    Long-term debt                397,022                 100,167
    Deferred revenue                1,638                     693
    Deferred income taxes          13,357                  12,839
    Post-retirement benefits        1,092                     843

    Stockholders' (deficit) equity:
      8% noncumulative, nonvoting
        preferred stock, $10 par
        value, redeemable by
        the Company at par;
        liquidation value at
        par; 100,000 shares authorized;
        77,300 shares issued and
        outstanding at January 3, 1998 --                     773
      Common stock, Class A,
        voting, $.01 par value,
        62,500,000 shares authorized;
        12,603,800 and 2,412,500 issued
        and outstanding               126                      19
      Common stock, Class B,
        nonvoting, $.01 par value,
        437,500,000 shares authorized;
        0 and 21,875,000 shares issued
        and outstanding                --                     175
      Additional paid-in capital  107,654                      --
      Outstanding stock options       300                      --
      Stockholder subscription
        receivables               (2,615)                      --
      (Accumulated deficit) retained
        earnings                (205,211)                 142,581
      Total stockholders'
        (deficit) equity         (99,746)                 143,548
                                 $594,917                $461,832