Bapcor (BAP) Trading Update summary

Business performance and operational updates

• Pricing strategy and product range optimization, targeted promotions, and enhanced sales team training are being implemented to regain customers and boost competitiveness.

• Ongoing store network optimization includes openings, closures, refurbishments, and the launch of Net Promoter Score (NPS) for real-time customer feedback.

• Incremental investments include AUD 3 million in brand marketing, AUD 6 million in technology, and AUD 7 million in supply chain to support transformation.

• Cost-saving initiatives, including supply chain and office structure optimization, are underway, targeting AUD 20 million pre-tax savings in H2.

• Management changes and external review have addressed operational issues in the tools and equipment business.

Financial impacts and guidance

• Program targets AUD 20 million pre-tax savings in H2, with AUD 4 million implementation cost in H1.

• Tools and equipment business review led to a negative AUD 12 million pre-tax impact on H1 earnings due to inventory and margin issues.

• Q1 FY26 sales revenue declined by 2.7% year-on-year to AUD 497.7 million, mainly due to tools and equipment segment and tighter credit management.

• H1 statutory NPAT guidance is AUD 3–7 million, underlying NPAT at AUD 14–18 million; full-year underlying NPAT expected at AUD 51–61 million.

• FY26 statutory NPAT forecast is AUD 40–50 million, with capital expenditure projected at AUD 32–38 million focused on branch expansion and technology.

Segment performance and outlook

• Trade segment revenue declined 0.9%, with modest parts revenue drop and significant tools and equipment weakness; underlying parts business shows quarter-on-quarter improvement.

• Network segment earnings improved due to warehouse rationalizations; wholesale and commercial vehicles are gaining competitiveness and retaining cost benefits.

• Retail segment, especially Autobarn, remains challenged by weak consumer demand, but sales decline is slowing and gross margin is improving due to promotional changes.

• New Zealand segment faces economic headwinds, increased competition, and a shift to lower-margin products, with potential impairment to intangible assets under review.

• Cost benefits from FY25 initiatives are being offset by inflationary pressures.