Autobarn owner Bapcor’s share price collapse as directors Mark Bernhard, Brad Soller and James Todd resign

A profit warning, ballooning write-offs and the shock resignation of three directors caused one analyst to ask if the company was still ‘investible’. Bunnings is the latest force in Bapcor’s retail nightmare.

Analysts have queried whether Autobarn owner Bapcor is still “investible”.

Bunnings’s arrival on the auto parts scene has claimed its first scalp with the retailer behind Autobarn, Burson and Midas in a shock earnings downgrade disclosing more writedowns and the immediate resignation of three directors.

Bapcor, a long-established operator of more than 1,100 stores in the auto category whose roots stretch back to 1971, has confessed to a littany of problems from contract disputes to a blowout in replacing its payroll systems. Worsening its trading over the last few months has been the threat from new competitors.

In March, the Bunnings chain owned by Perth-based conglomerate Wesfarmers unveiled its aggressive plan to capture a slice of the $1.5bn auto parts and products category by offering everything from oils, lubricants and cleaners to auto tools and accessories.

At the time, Bunnings boss Mike Schneider said the expanded offering would see Bunnings greatly broaden its currently limited range to 300 new auto products rolled out to more than 300 Bunnings stores in 2025.

“This is the start of something,” Mr Schneider memorably warned. “We love competition. This is helping us understand how this resonates, but if it is anything like we’ve seen with other categories there’ll be auto 2.0 down the track with an even bigger range,” the Bunnings boss added.

While Bapcor chief executive Angus McKay, the former 7-Eleven Australia boss, didn’t refer directly to Bunnings in his profit warning on Thursday, he did refer to “competitor activity” as one of the reasons for poorer sales at Bapcor’s stable.

The admission and boardroom upheaval sent Bapcor shares into a tailspin to wipe more than $500m from its market capitalisation. Such was the shock that one broker asked whether the company was still “investible”.

Autobarn and Burson are facing the challenge presented by hardware giant Bunnings

Bapcor lost almost 30 per cent of its market value on Thursday as investors pushed the panic button, capitalising it at around $1.24bn. That is particularly damning given the board last year rejected a $1.83bn takeover bid from private equity firm Bain Capital.

Now, its investors and what remains of the Bapcor board – after directors Mark Bernhard, Brad Soller and James Todd tendered their resignations – will be left to pick up the pieces.

The woes include asset write-offs related to payments no longer expected, losses on some businesses sold, and contract disputes amounting to between $43.3m and $45.3m to take total significant items for fiscal 2025 to $48m-$50m.

It said certain, but unnamed, supplier disputes and receivables identified during a balance sheet review were no longer deemed collectable.

Collectively, these triggered $6.4m in write-offs in the second half.

There was also a spike in costs relating to the replacement of a payroll system.

Bapcor now expects to report a fiscal 2025 statutory net profit of $31m to $34m, against a statutory loss of $158.3m in 2024 and a pro-forma profit of $94.8m.

Autobarn is feeling the Bunnings pinch

Adding to this bleak outlook was second-half trading which was weaker than expected, particularly during the key months of May and June, with trade sales up just 1.4 per cent to $785.4m and specialist wholesale sales down 3.1 per cent.

Retail sales were worse, reflecting the fragile state of consumers when it comes to discretionary spending on their cars; they slipped 3.5 per cent to $387.3m.

“Continued challenging retail environment impacting the retail segment, including lower spending on discretionary categories, competitor activity and changes to our promotional cycle,” Bapcor said in its ASX release.

Shares in Bapcor collapsed to a low of $3.49. Last year’s spurned takeover was pitched at $5.40 a share, which the Bapcor board rejected at the time as not representing “fair value for Bapcor ... (and) not in the best interests of Bapcor shareholders”.

Citi analyst Sam Teeger said: “While we thought conditions were tough at Bapcor, today’s update suggests conditions are significantly more challenging than expected.”

He added that taking into account three unexpected board departures, a deterioration in trading into year-end, and new accounting complexities and restatements following a recent finance boss transition, it was “difficult to see the stock as investible right now”.

Mr Teeger also saw Bunnings as a major threat for Bapcor.

“Retail remains challenging noting lower spending on discretionary categories, competitor activity. Repco appears to be performing well and we have been concerned about Bunnings’s entry into the space.”

Originally published as Autobarn owner Bapcor’s share price collapse as directors Mark Bernhard, Brad Soller and James Todd resign