The following discussion of our consolidated historical results of operations and financial condition should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report. Our first quarter consists of 16 weeks and our other three quarters consist of 12 weeks each, with the exception of the fourth quarter which will contain 13 weeks due to our 53 week fiscal year in 2008.

Certain statements in this report are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which are usually identified by the use of words such as "will," "anticipates," "believes," "estimates," "expects," "projects," "forecasts," "plans," "intends," "should" or similar expressions. We intend those forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are included in this statement for purposes of complying with these safe harbor provisions.

These forward-looking statements reflect current views about our plans, strategies and prospects, which are based on the information currently available and on current assumptions.

Although we believe that our plans, intentions and expectations as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions or expectations will be achieved. Listed below and discussed in our annual report on Form 10-K for the year ended December 29, 2007 are some important risks, uncertainties and contingencies which could cause our actual results, performances or achievements to be materially different from the forward-looking statements made in this report. These risks, uncertainties and contingencies include, but are not limited to, the following:

· the implementation of our business strategies and goals;
· our ability to expand our business;
· competitive pricing and other competitive pressures;
· a decrease in demand for our products;
· the occurrence of natural disasters and/or extended periods of unfavorable weather;
· our ability to obtain affordable insurance against the financial impacts of natural disasters;
· the availability of suitable real estate locations;
· our overall credit rating which impacts our debt interest rate and ability to obtain additional debt;
· increase in fuel costs as it impacts our cost to operate and the consumer's ability to shop in our stores;
· deterioration in general economic conditions;
· our ability to attract and retain qualified team members;
· our relationship with our vendors;
· our involvement as a defendant in litigation or incurrence of judgments, fines or legal costs;
· adherence to the restrictions and covenants imposed under our revolving and term loan facilities; and
· acts of terrorism.

We assume no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In evaluating forward-looking statements, you should consider these risks and uncertainties, together with the other risks described from time to time in our other reports and documents filed with the Securities and Exchange Commission, and you should not place undue reliance on those statements.

Management Overview

We primarily operate within the United States automotive aftermarket industry, which includes replacement parts (excluding tires), accessories, maintenance items, batteries and automotive chemicals for cars and light trucks (pickup trucks, vans, minivans and sport utility vehicles). We operate in two reportable segments: Advance Auto Parts, or AAP, and Autopart International, or AI. The AAP segment is comprised of our store operations within the United States, Puerto Rico and Virgin Islands which operate under the trade names "Advance Auto Parts," "Advance

Discount Auto Parts" and "Western Auto." For additional information regarding our segments, see Note 11, Segments and Related Information, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. The AI segment consists solely of Autopart International, Inc., which operates as independent, wholly-owned subsidiary. As of July 12, 2008, we operated a total of 3,325 stores.

Second Quarter Highlights

Highlights from our second quarter include:

· We recorded earnings per diluted share of $0.79 compared to $0.64 for the same quarter of fiscal 2007. This 23% increase was primarily driven by an 8.6% increase in operating income and approximately 13 million shares repurchased over the past four fiscal quarters.

· We generated sales growth of 5.6% through a combination of new stores opened over the last year and a 2.9% comparable store sales increase. This comparable sales increase was driven by a 13.5% comparable sales increase in our commercial business which was partially offset by a 0.8% decline in the DIY, or do-it-yourself, business.

· Our operating cash flow increased to $350.0 million for the twenty-eight weeks ended July 12, 2008, an increase of $70.0 million over the comparable period last year.

· We repurchased 0.2 million shares of common stock for $7.5 million under our $250 million stock repurchase program. During the twenty-eight weeks ended July 12, 2008, we repurchased 4.8 million shares of common stock for $162.8 million, of which 4.6 million shares of common stock were repurchased under our previous $500 million stock repurchase program.

Update on Turnaround Strategies

Our favorable results experienced during the second quarter are in part being driven by progress on our key turnaround strategies and benefits from the economic stimulus checks. We believe our focus on these strategies will enable us to achieve our recently announced goal of $10 billion in sales in the next five years. As disclosed last quarter, our key turnaround strategies are:

††† Commercial Acceleration

††† DIY Transformation

††† Availability Excellence

††† Superior Experience

Each of the four strategies is at a different stage of progression.

The Commercial Acceleration strategy is the furthest along as evidenced by the 13.5% comparable store sales increase and a total commercial sales increase of 17.2% over our prior year second quarter. We continue to add parts to our stores with commercial programs, including key brands which are highly respected and preferred by our commercial customers. Additional areas of progression include the heightened focus on parts knowledge by our store team members, improved customer relationships and the development of more analytical support of the commercial business. We are also testing other initiatives which will be rolled out on a larger scale that meet the needs of our commercial customers while driving shareholding value.

The DIY Transformation is at an earlier stage of progression. The initial focus of the DIY Transformation strategy is to turnaround our current DIY sales trends and to transform our DIY business over the long-run. Our second quarter DIY comparable sales decrease of 0.8% was a measurable improvement from the previous trend of a 3% decrease for each of the last two fiscal quarters. We believe our DIY results are beginning to benefit from the parts availability initiatives and initial rollout of attachment selling combined with the benefits of the economic stimulus checks. In addition to these initiatives, we are commencing other initiatives, including efforts to identify

opportunities to improve scheduling during peak selling hours and to improve bi-lingual staffing.

The Availability Excellence and Superior Experience strategies are intended to provide the capabilities to drive shareholder value through the Commercial Acceleration and DIY Transformation strategies. The Availability Excellence strategy represents our commitment to enhance the availability of parts in our stores to better serve our commercial and DIY customers. This strategy incorporates our supply chain and logistics network capabilities, space management and increased leverage of our e-commerce platform. We are making progress on the parts availability initiative as the merchandising and inventory management teams partner with the commercial and DIY teams to accelerate sales growth. We will continue to measure progress in this strategy, using productivity metrics such as sales per square foot and gross margin return on inventory. Superior Experience is centered around our store operations and customer service. The leaders of this area will be re-engineering the store experience and store operations as well as better understanding what the customer ultimately wants through the measurement of team member engagement and customer satisfaction, which we believe will drive improvement in our results in future quarters.

Although we have experienced favorable financial results for the first and second quarters, we remain cautiously optimistic for the remainder of 2008 given the current economic environment, positive impact of economic stimulus checks during the second quarter and continued high fuel prices. Furthermore, we are still in the early stages of implementing certain strategies as previously discussed and are committed to making the necessary investments for the long-term success of the Company.

Consolidated Operating Results and Key Statistics and Metrics

The following table highlights certain consolidated operating results and key
statistics and metrics for the twelve and twenty-eight weeks ended July 12, 2008
and July 14, 2007, respectively, and fiscal years ended December 29, 2007 and
December 30, 2006. We will use these key statistics and metrics to measure the
financial progress of our turnaround strategies.

                             Twelve Weeks Ended            Twenty-Eight Weeks Ended               Fiscal Years Ended
                          July 12,        July 14,         July 12,         July 14,        December 29,       December 30,
                            2008            2007             2008             2007              2007               2006
Operating Results:
Total net sales (in
000s)                    $ 1,235,783     $ 1,169,859     $   2,761,915     $ 2,637,979     $    4,844,404     $    4,616,503
Total commercial net
sales (in 000s)          $   357,495     $   305,153     $     796,167     $   688,446     $    1,290,602     $    1,155,953
Comparable store net
sales growth (1)                2.9%            1.2%              1.6%            0.9%               0.7%               1.6%
DIY comparable store
net sales growth (1)          (0.8%)          (0.2%)            (2.0%)          (0.3%)             (1.1%)             (0.8%)
Commercial comparable
store net sales growth
(1)                            13.5%            5.4%             11.9%            4.8%               6.2%              10.7%
Gross profit                   48.6%           48.1%             48.7%           48.2%              47.9%              47.7%
Selling, general &
administrative
expenses (SG&A)                38.3%           38.0%             38.8%           38.7%              39.3%              39.0%
Operating margin               10.4%           10.1%              9.9%            9.6%               8.6%               8.7%
Diluted earnings per
share                    $      0.79     $      0.64     $        1.65     $      1.35     $         2.28     $         2.16

Key Statistics and
Metrics:
Number of stores, end
of period                      3,325           3,187             3,325           3,187              3,261              3,082
Total store square
footage, end of period
(in 000s)                     24,431          23,480            24,431          23,480             23,982             22,753
Total team members,
end of period                 47,050          45,505            47,050          45,505             44,141             44,421
Average net sales per
store (in 000s)(2)       $     1,526     $     1,544     $       1,526     $     1,544     $        1,527     $        1,551
Average net sales per
square foot (2)          $       207     $       209     $         207     $       209     $          207     $          210
Operating income per
team member (in
000s)(2)(3)              $      9.42     $      9.35     $        9.42     $      9.35     $         9.40     $         9.29
SG&A expenses per
store (in 000s) (2)      $       601     $       605     $         601     $       605     $          601     $          604
Gross margin return on
inventory (2)(4)         $      3.63     $      3.55     $        3.63     $      3.55     $         3.39     $         3.38

Note: These metrics should be reviewed along with the footnotes to the table setting forth our selected store data in Item 6. "Selected Consolidated Financial Data" in our annual report on Form 10-K for the fiscal year ended December 29, 2007, which was filed with the SEC on February 27, 2008, except for additional footnotes below. The footnotes contain descriptions regarding the calculation of these metrics.

(1) Beginning in fiscal 2008, the Company includes in its comparable store sales the net sales from stores operated in Puerto Rico and Virgin Islands, or Offshore, and AI stores. The comparable periods have been adjusted accordingly.

(2) These financial metrics presented for each quarter and year-to-date period are calculated on an annual basis and accordingly reflect the last four fiscal quarters completed.

(3) Operating income per team member is calculated as operating income divided by an average of beginning and ending number of team members.

(4) Gross margin return on inventory is calculated as gross profit divided by an average of beginning and ending inventory, net of accounts payable and financed vendor accounts payable.

Store Development by Segment

AAP Segment

At July 12, 2008, we operated 3,203 stores within the United States, Puerto Rico and the Virgin Islands. We operated 3,173 stores throughout 40 states in the Northeastern, Southeastern and Midwestern regions of the United States. These stores operated under the "Advance Auto Parts" trade name except for certain stores in the state of Florida, which operated under the "Advance Discount Auto Parts" trade name. These stores offer a broad selection of brand name and proprietary automotive replacement parts, accessories and maintenance items for domestic and imported cars and light trucks. In addition, we operated 30 stores under the "Western Auto" and "Advance Auto Parts" trade names, located Offshore.

The following table sets forth information about our AAP stores during the twelve and twenty-eight weeks ended July 12, 2008, including the number of new, closed and relocated stores and stores with commercial programs that deliver products to our commercial customers' place of business. We lease approximately 80% of our stores.

                                              Twelve           Twenty-Eight
                                            Weeks Ended         Weeks Ended
                                           July 12, 2008       July 12, 2008
Number of stores at beginning of period             3,179               3,153
New stores                                             26                  56
Closed stores                                         (2)                 (6)
Number of stores, end of period                     3,203               3,203
Relocated stores                                        4                   7
Stores with commercial programs                     2,659               2,659

AI Segment

At July 12, 2008, we operated 122 stores in the Northeastern region of the United States under the "Autopart International" trade name. These stores offer a broad selection of brand name and proprietary automotive replacement parts, accessories and maintenance items for domestic and imported cars and light trucks, with a greater focus on imported parts. AI primarily serves the commercial market from its retail locations and additionally through a wholesale distribution network.

The following table sets forth information about our AI stores, including the number of new and closed stores, during the twelve and twenty-eight weeks ended July 12, 2008.

                                              Twelve           Twenty-Eight
                                            Weeks Ended         Weeks Ended
                                           July 12, 2008       July 12, 2008
Number of stores at beginning of period               112                 108
New stores                                             10                  14
Closed stores                                           -                   -
Number of stores, end of period                       122                 122
Stores with commercial programs                       122                 122

As previously disclosed in our Form 10-K, we anticipate that we will add a total of approximately 115 new AAP and AI stores during 2008 primarily through new store openings.

Critical Accounting Policies

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ from these estimates. During the twelve and twenty-eight weeks ended July 12, 2008, we consistently applied the critical accounting policies discussed in our annual report on Form 10-K for the year ended December 29, 2007. For a complete discussion regarding these critical accounting policies, refer to this annual report on Form 10-K.

Components of Statement of Operations

Net Sales

Net sales consist primarily of comparable store sales and new store net sales. We calculate comparable store sales based on the change in net sales starting once a store has been open for 13 complete accounting periods. We include relocations in comparable store sales from the original date of opening. Beginning in 2008, we also include in comparable store sales the net sales from the Offshore and AI stores. The comparable periods have been adjusted accordingly.

Cost of Sales

Our cost of sales consists of merchandise costs, net of incentives under vendor programs, inventory shrinkage, defective and warranty costs, and warehouse and distribution expenses. Gross profit as a percentage of net sales may be affected by variations in our product mix, price changes in response to competitive factors and fluctuations in merchandise costs, vendor programs, inventory shrinkage, defective and warranty costs and warehouse and distribution costs. We seek to avoid fluctuation in merchandise costs and instability of supply by entering into long-term purchase agreements, without minimum purchase volume requirements, with vendors when we believe it is advantageous. Our gross profit may not be comparable to those of our competitors due to differences in industry practice regarding the classification of certain costs. See Note 1 in our condensed consolidated financial statements for additional discussion of these costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of store payroll, store occupancy (including rent and depreciation), advertising expenses, commercial delivery expenses, other store expenses and general and administrative expenses, including salaries and related benefits of store support center team members, share-based compensation expense, store support center administrative office expenses, data processing, professional services, self-insurance costs and other related expenses.

Results of Operations

The following table sets forth certain of our operating data expressed as a
percentage of net sales for the periods indicated.

                                      Twelve Week Periods Ended             Twenty-Eight Week Periods Ended
                                             (unaudited)                              (unaudited)
                                     July 12,           July 14,           July 12,                 July 14,
                                       2008               2007               2008                     2007
Net sales                                 100.0 %            100.0 %              100.0 %                  100.0 %
Cost of sales, including
purchasing and
warehousing costs                          51.4               51.9                 51.3                     51.8
Gross profit                               48.6               48.1                 48.7                     48.2
Selling, general and
administrative expenses                    38.3               38.0                 38.8                     38.7
Operating income                           10.4               10.1                  9.9                      9.6
Interest expense                           (0.6 )             (0.7 )               (0.7 )                   (0.7 )
Other income, net                          (0.0 )              0.0                 (0.0 )                    0.0
Provision for income taxes                  3.7                3.6                  3.4                      3.4
Net income                                  6.1 %              5.8 %                5.7 %                    5.5 %

Twelve Weeks Ended July 12, 2008 Compared to Twelve Weeks Ended July 14, 2007

Net sales for the twelve weeks ended July 12, 2008 were $1,235.8 million, an increase of $65.9 million, or 5.6%, as compared to net sales for the twelve weeks ended July 14, 2007. The net sales increase was due to an increase in comparable store sales of 2.9% and contributions from the 138 net new AAP and AI stores opened within the last year. AAP produced sales of $1,195.0 million, an increase of $59.0 million, or 5.2%. AAP's sales increase was primarily driven by a 2.8% comparable store sales increase and sales from the 116 net new stores opened within the last year. The AAP comparable store sales increase was driven by (i) an increase in average ticket sales and customer traffic in our commercial business and (ii) an increase in average ticket sales by our DIY customers offset by a decrease in DIY customer count. AI produced sales of $40.8 million, an increase of $6.9 million, or 20.4%. AI's sales increase was primarily driven by a 7.2% comparable store sales increase and sales from 22 stores opened within the last year.

Gross profit for the twelve weeks ended July 12, 2008 was $600.8 million, or 48.6% of net sales, as compared to $562.9 million, or 48.1% of net sales, for the twelve weeks ended July 14, 2007, or an increase of 51 basis points. The increase in gross profit as a percentage of net sales was driven by lower supply chain and logistics costs gained primarily through the efficiencies of handling more inventory in our distribution centers, and more effective pricing.

Selling, general and administrative expenses increased to $472.9 million, or 38.3% of net sales, for the twelve weeks ended July 12, 2008, from $445.1 million, or 38.0% of net sales, for the twelve weeks ended July 14, 2007, or an increase of 23 basis points. The increase in selling, general and administrative expenses as a percentage of sales was driven by increased incentive compensation, increased spending on strategic initiatives and higher gasoline costs. Partially offsetting these items were cost savings realized from the cost reduction initiatives we completed in fiscal 2007 combined with leveraging fixed expense as a result of our favorable comparable sales increase during the second quarter.

Operating income for the twelve weeks ended July 12, 2008 was $128.0 million, or 10.4% of net sales, as compared to $117.8 million, or 10.1% of net sales, for the twelve weeks ended July 14, 2007, an increase of 8.6%. This increase in operating income, as a percentage of net sales, was reflective of an increase in gross profit partially offset by slightly higher selling, general and administrative expenses as previously discussed. AAP produced operating income of $125.7 million, or 10.5% of net sales, for the twelve weeks ended July 12, 2008 as compared to $116.7 million, or 10.3% of net sales, for the twelve weeks ended July 14, 2007. AI generated operating income of $2.3 million for the twelve weeks ended July 12, 2008 as compared to $1.1 million for the same period last year.

AI's operating income increased primarily due to the positive sales results during the quarter and decrease in payroll expense as a percentage of sales.

Interest expense for the twelve weeks ended July 12, 2008 was $7.3 million, or 0.6% of net sales, as compared to $7.4 million, or 0.7% of net sales, for the twelve weeks ended July 14, 2007. The decrease in interest expense is a result of lower average borrowing rates offset by higher average outstanding borrowings during the twelve weeks ended July 12, 2008 compared to the same period ended July 14, 2007.

Income tax expense for the twelve weeks ended July 12, 2008 was $45.2 million, as compared to $42.5 million for the twelve weeks ended July 14, 2007. Our effective income tax rate was 37.5% for the twelve weeks ended July 12, 2008 compared to 38.3% for the same period ended July 14, 2007.

We generated net income of $75.4 million, or $0.79 per diluted share, for the twelve weeks ended July 12, 2008, as compared to $68.4 million, or $0.64 per diluted share, for the twelve weeks ended July 14, 2007. As a percentage of net sales, net income for the twelve weeks ended July 12, 2008 was 6.1%, as compared to 5.8% for the twelve weeks ended July 14, 2007.

Twenty-Eight Weeks Ended July 12, 2008 Compared to Twenty-Eight Weeks Ended July 14, 2007

Net sales for the twenty-eight weeks ended July 12, 2008 were $2,761.9 million, an increase of $123.9 million, or 4.7%, as compared to net sales for the twenty-eight weeks ended July 14, 2007. The net sales increase was due to an increase in comparable store sales of 1.6% and contributions from the 138 net new AAP and AI stores opened within the last year. AAP produced sales of $2,676.1 million, an increase of $107.9 million, or 4.2%. AAP's sales increase was primarily driven by a 1.5% comparable store sales increase and sales from the 116 net new stores opened within the last four fiscal quarters. The AAP comparable store sales increase was driven by (i) an increase in average ticket sales and customer traffic in our commercial business and (ii) an increase in average ticket sales by our DIY customers offset by a decrease in DIY customer . . .