The Bapcor Ltd (ASX: BAP) share price has returned from its trading halt with an almighty thud.
In early trade, the auto parts retailer's shares were down as much as 35% to a 52-week low of $3.76.
Bapcor's shares have since recovered a touch but remain down almost 30% at the time of writing.
Why is the Bapcor share price crashing?
There are a couple of reasons for today's weakness.
One is the surprise news that its CEO-elect, Paul Dumbrell, decided against joining the company the day before he was due to start in the role.
The company's current interim CEO and managing director, Mark Bernhard, will continue in the role while Bapcor begins a new executive search.
Bapcor's chair, Margie Haseltine, described the news as disappointing. She said:
This is a disappointing situation, however we are pleased that Mark will remain acting in the role, so we can continue to leverage his expertise and experience.
What else?
Also weighing heavily on the Bapcor share price is news that the company's performance has been below expectations in the second half of FY 2024.
According to a trading update, Bapcor expects its second-half pro-forma net profit after tax to be below the $54.2 million it recorded in the first half.
Management advised that its FY 2024 pro-forma net profit after tax is expected to be between $93 million and $97 million for the year (FY23: $125.3 million). This implies a second-half profit of $38.8 million to $42.8 million.
The company is now actively working to reduce its cost base to be more appropriate for the current trading environment.
Why is it underperforming?
Bapcor advised that trading conditions in its Retail business have remained challenging due to weak consumer confidence and lower levels of discretionary spending.
In addition, the Wholesale business is being impacted by competitive pricing, resulting in volume and margin compression.
Another disappointment is that the forecast $7 million to $10 million benefits from the Better than Before (BTB) program have not been realised to the extent expected in the second half.
Management also warned that a decline in the performance of the Retail business may result in an impairment of tangible and intangible assets. This will be confirmed as part of the year-end process.
Bernhard commented:
Trading conditions since our last update to the market have remained challenging as consumers continue to pull back on spending, primarily impacting our Retail business. Pleasingly, our Trade and Specialist Networks businesses have continued to grow sales, on what was a strong prior year comparative.