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Shares in auto equipment retailer Bapcor (ASX: BAP) slumped more than 19 per cent this morning after the company revealed it was heading for a bottom-line loss in the December half-year following a below-par sales performance in October and November.
The shares, which were already down more than 50 per cent since the beginning of this year, quickly hit a low of $1.90 after the market opened – down 45c from yesterday’s close.
Bapcor, which owns high-profile retail businesses Autobarn, Autopro, Midas and ABS auto service centres, has downgraded its target for the first half of FY26 to a loss of between $5 million and $8 million.
This compares with a $40.8 million statutory profit a year earlier and a previous profit target of between $3 million and $7 million.
The group’s Trade division, which includes Burson Auto Parts, was among the hardest hit during the period with Bapcor revealing that revenue fell for tools and equipment, although parts revenue grew “modestly”.
The bottom-line loss for the December half will be driven by a $19 million pre-tax impairment, although this excludes potential impairments in the group’s New Zealand business announced in October.
The New Zealand segment is being hit by changes to the group’s distribution footprint which Bapcor expects to generate about $20 million in pre-tax savings in the second half.
“The weaker operational performance in October and November is disappointing,” says Bapcor CEO Angus McKay.
“Although the turnaround of the business is more challenging and taking longer than expected we are committed to doing the difficult work that will result in a stronger, more sustainable company.”
Among the initiatives already implemented by Bapcor are price adjustments for specific parts categories in its Trade division to regain market share.
“The price reductions have adversely impacted margins in the short term but are expected to drive volume growth in the future,” says the company.
The $19 million in impairments to be recorded by Bapcor comprise $15 million for its tools and equipment business within the Trade segment, which is $3 million higher than expected.
Restructuring costs of $4 million are in line with the previous forecasts.
Stripping out the impairments, Bapcor is targeting an underlying NPAT of between $5 million and $8 million for the December half.
The company points out that its Retail division reported a “strong” October and November, with revenue up 1.3 per cent compared to a year earlier, largely due to promotions over the Black Friday sales period.
The company says its Networks and New Zealand segments are still performing in line with previous forecasts.
With the company’s shares now toying with record lows and raising debt covenant concerns, Bapcor points out that it “continues to maintain strong relationships with its lenders”.
“Bapcor has been in positive dialogue with these lenders since the announcement of 20 October 2025, prudently seeking to increase its leverage covenant for FY26,” says the company.
Bapcor’s shares were trading at $1.91 at 10.40am (AEDT).
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