Why This Matters to Distributors: LKQ’s troubles underscore the operational stakes of major software implementations. Disruptions tied to a system rollout in Germany, combined with declining sales volumes elsewhere in Europe, contributed to an expected quarterly loss and prompted leadership changes and an outside operational review.
LKQ Corp. announced the departure of its chief executive and European business leader Oct. 23 and withdrew its full-year financial forecast after operational problems and declining sales in Europe pushed the vehicle parts distributor toward a third-quarter loss.
Salvatore A. Abbate will become president and CEO Dec. 15, succeeding Justin Jude, who left the company Oct. 23. Andy Hamilton also departed that day as president and managing director of LKQ Europe.
The company retained Alvarez & Marsal to advise on its European operations, with an initial focus on improving customer service, stabilizing operations, and strengthening cost controls. The actions come amid the board’s continuing review of strategic alternatives.
“LKQ’s performance, particularly in Europe, has fallen significantly short of the board’s expectations, and the board is taking decisive action to address it,” chairman John Mendel said.
LKQ expects revenue of $3.32 billion for the quarter ending Sept. 30, down about 5.1% from $3.5 billion a year earlier. Parts and services sales declined 5.4%, excluding the effects of acquisitions, divestitures, and currency changes.
The company expects a loss from continuing operations attributable to LKQ stockholders of $16 million to $32 million, compared with a profit of $178 million a year earlier. The preliminary results include $111 million in noncash charges to reduce the recorded value of goodwill and assets held for sale.
Europe accounted for the bulk of the shortfall. The region’s parts and services sales fell 9.8%, excluding acquisitions, divestitures, and currency changes, as disruptions associated with an enterprise resource planning system implementation in Germany compounded declining sales volumes in the United Kingdom and Benelux.
Enterprise resource planning systems connect functions such as purchasing, inventory management, order processing, and financial reporting. LKQ did not describe the German implementation problems in detail or provide a timetable for resolving them.
The company said its North American business performed in line with expectations despite softer market conditions. Its Specialty business finished modestly below expectations, though the shortfall was more limited than Europe’s.
Mendel and Sue Gove, chair of LKQ’s audit committee, will oversee the company through an interim office of the chief executive officer until Abbate arrives. They will work with LKQ’s leadership team to manage operations during the transition.
LKQ cited its European results and the leadership transition in withdrawing its 2026 forecast, which it last updated on July 30. The company described the management changes and outside advisory engagement as steps connected to its strategic review but did not announce a transaction or a deadline for completing the process.
Based in Antioch, Tennessee, LKQ supplies replacement and specialty parts, equipment and services for automobiles, trucks, recreational vehicles, and performance vehicles. It operates in North America, Europe, and Taiwan.
LKQ plans to release full third-quarter results and hold an earnings call Oct. 29. The preliminary figures are unaudited and could change as the company completes its financial reporting procedures.
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