The Bapcor Ltd (ASX: BAP) share price is down 20% after the auto parts business revealed a tough trading update.
Bapcor owns a number of auto parts businesses including Burson Auto Parts, Autobarn, Autopro, Midas, ABS, Shock Shop and Battery Town.
Challenging trading
The company noted that its performance during October and November was below expectations, mainly in the trade segment.
Bapcor said that revenue declined in the tools and equipment segment compared to the prior year, though parts revenue had grown “modestly”.
The company also said that the trade segment is investing in pricing across specific parts categories to regain market share. Those price reductions have “adversely impacted margins in the short term but are expected to drive volume growth in the future”.
However, the retail segment had a “strong” October and November, with revenue rising 1.3% compared to the prior year, driven by strong Black Friday sales activities.
Bapcor said that the networks and New Zealand segment remain in line with previous expectations.
Profit commentary
Bapcor warned that due to the weaker trading performance in the last two months, it expects statutory net profit after tax (NPAT) for the first half of FY26 to be a loss of between $5 million to $8 million.
This new guidance range includes around $19 million of pre-tax one-off items. But, it doesn’t include potential impairments associated with the New Zealand segment which was previously announced in an ASX announcement on 20 October 2025.
Those one-offs include around $15 million from a review into the tools and equipment business, as well as around $4 million for restructuring costs.
Underlying net profit for HY26 before those one-offs is expected to be in the range of $5 million to $8 million.
The company said it continues to “maintain strong relationships with its lenders”. Bapcor has been seeking to increase its debt covenants (limits) for FY26.
This has led to FY26 full-year statutory net profit guidance of between $31 million to $36 million, excluding the potential New Zealand impairment.
Underlying net profit for FY26 is now expected to be between $44 million to $49 million.
Can things get better in the FY26 second half for the Bapcor share price?
Bapcor is expecting improvements in the second half compared to the first half of FY26. Time will tell if this plays out as positively as the company is expecting.
The ASX share believes there will be operational improvements with a focus on driving sales growth, benefits from the pricing realignment measures, delivering previously-announced savings initiatives to achieve $20 million of pre-tax benefits, and the one-off nature of the $19 million pre-tax items in HY26.
The Bapcor share price is down 70% in the last five years. Is it now significantly undervalued or is this a fair value for a challenged business? It’s not the sort of ASX share I’d want to buy, I like expanding ASX growth shares which have a clearer road to success and profit growth.
