Thank you, Lynette, and welcome to everyone who has dialed into today's call. As Lynette said, my name is Angus McKay, and I'm joined today by our CFO, Kim Kerr, and together we'll be presenting the Bapcor Fiscal Year 2025 Results. I'd like to remind everybody that you'll only be able to participate in the Q&A session if you have joined us via the dial-in and not via the webcast. Also, please note today's call is being recorded. I'd like to start today by acknowledging the traditional custodians of the country throughout Australia and pay our respects to elders past and present. We recognize the continuing connection of First Nations people with country across Australia and beyond, and in particular, the Wurundjeri people of the Kulin Nation, which is the land where we meet today. Today, I'll talk to the results at a group level.
I'll then touch on our strategic priorities and then address each of the segments. I'll then hand over to Kim to talk to the financials in a more detailed manner before closing with a summary. I'll then open for questions. Before getting into the results, let me remind you that today's presentation of financial results will be consistent with our prior period reporting. Specifically, our view of segments will be consistent with that of the first half of fiscal 2025. We will prepare a restated view in line with our outlined strategy and operating model, including the removal of intercompany trading, and make that available to you in quarter two of the current fiscal year. I started in the business in late August 2024. Since then, the journey has been intense and fast-paced.
I've continued to spend time with employees, customers, suppliers, franchisees, and shareholders, and I continue to clearly see a positive future for Bapcor. My focus has been on understanding the business, what works and what doesn't, its customers and our people, and importantly, our ability to execute. At the core, it is a strong, good business with committed team members, loyal customers, and strong suppliers. It is overly complex, lacks focus, and is too reactive and too short-term. Upon joining, I inherited a specific set of actions that flowed from the full year 2024 result that were urgently commenced addressing both our cost base and simplifying our distribution structure. These made sense, and they needed to be completed. We have then set about delivering a clear strategy in communicating that to our people, shareholders, and stakeholders.
This provides clear priorities and allows us to focus on building the business for long-term, sustainable profitability. The executive team was reshaped in light of the new plan and with key appointments being Simon Broome as the EGM of Trade and Kim Kerr as our CFO. They both joined the balance of the executive team who own and drive our strategy, whilst at the same time focusing the business back on customer, sales, and trading, and executing that through a motivated and engaged team. Later this morning, Kim will address in detail the significant items announced in our July 2024 market release, but allow me to make the following observations. You'll note that we have modestly increased the quantum of those significant items by some $2.3 million as a result of the final audit and the full-year processes.
The full-year balance sheet review was a necessary and logical step in ensuring the business moves into fiscal 2026 with financial clarity following the significant changes across the year. I am disappointed at both the quantum and the nature of the significant items announced, but the business needs to deal with the issues in a transparent manner. The required business turnaround was always going to be challenging, but I am clear that the review, as completed, places us in a far superior position to deal with the required business and operational change. Now turning to slide six and the fiscal 2025 full-year result. Pro forma impact was down by 4.4% on the prior period. Whilst pleasingly trade grew over the full year, its performance was offset by both retail and New Zealand, which were hampered by the prevailing macroeconomic environments.
Specialist wholesale revenue has also been impacted and disrupted by the ongoing consolidations and required restructuring, but I'm pleased to say EBITDA benefited by growing 5.2% compared to the prior period. Despite the challenging macro environment, trade grew revenue by 1.3% and EBITDA by 5.4% compared to the prior period. As previously stated, May and June were below expectation and impacted on our full-year result. The simplification of the business has been a priority over the year. Key actions included the final unwinding of the better-than-before headcount, consolidation of warehouse sites, reigniting store and branch openings and closures, technology upgrades, and consolidations in the integration of our truck and our electrical businesses. The warehouse consolidation activity was centered on specialist wholesale and has impacted short-term performance. We've been focused on driving the change rather than spreading it across multiple reporting periods. New Zealand was impacted by the continuing subdued economy.
That said, we've taken steps to increase our sales competitiveness, accelerate the impact, and importantly, the coverage of our call center operations and close underperforming stores. All of this has resulted in a negative year-over-year revenue performance for the group. We have delivered at the top end of the range provided for our cost savings at circa $27.5 million, with a gross exit rate of $40 million into FY 2026. We've been disciplined in our capital management, generating good cash flows with conversions sitting at 81.8%. We've declared a final dividend of $0.055 per share, representing a full-year payout ratio of 57%. The strategic reset of the business is underway, and importantly, the cultural changes required for us to be at our best are also well underway. We have closed or relocated 70 sites, including the considerable efforts of shutting 23 smaller DC locations and centralizing the associated stock.
21 new branches or stores were opened, reigniting this core growth lever, and our investment in strategic technology solutions has continued. Now turning to slide seven, we've included this slide to accurately convey the amount of site-based change we've undergone in 2025. These exits or moves simplify our business, allow for greater visibility to our operations and inventory, and improve our safety posture. In short, we believe they set us up for the future. There can be no doubt that the extent of these closures has impacted our operations, especially in specialist wholesale, but they are what was required to reposition the business. The new sites and DCs, I believe, are exciting. The new stores and branches represent a return to growing our network, one that is overdue. The new DCs are smaller warehouses that support the whole of business growth in New South Wales, South Australia, and Western Australia.
Now moving to slide eight, a reminder that on the 28th of April 2025, we outlined six strategic imperatives that will guide the wider business in its reset. They are optimizing our network, one supply chain, customer focus, digitalizing the business, store fitness, and simplifying the business. Whilst the imperatives are very new, we have already made progress. On the next six slides, let me quickly walk you through that picture. Optimizing the network. As a reminder, we have over 900 sites across Bapcor. Those require active management, including additions, closures, and consolidations, something that has been lacking over the past years. Fiscal year 2025 was busy, as we significantly changed our legacy network to make it more efficient and fit for purpose. These changes enable us to leverage our investments in the wider scalable supply chain and to commence a more nuanced approach to our expansion.
The work in this space has clearly begun with EBITDA benefits already materializing. What is to come will materially shift our customer-facing capabilities. We're already offering different delivery models from our major DCs, specifically catering for different businesses and different customer needs. In most cases, the customer is agnostic to the dispatch location. Optimizing stock locations presents an opportunity, one that will be pursued in New Zealand first and then into Australia. One supply chain. Activities under this imperative have also commenced, and they align to the work outlined on the previous imperative. With five state-based facilities now up and running, the next 12 months is about honing their operations and leveraging their scale. It is only in the last few months that we have commenced direct shipments into our DC locations, with prior practice being to redistribute from DC, Victoria.
This capability, combined with increased levels of offshore consolidation, presents an opportunity, noting that offshore consolidation has also only just commenced in the past 10 months. We'll shortly be going live with an extensive freight tender here in Australia, simplifying our carrier structures and a port looking to optimize both cost and service to our network and our customer base. Customer focus. Understanding our customer is firstly the most critical and important thing ahead of developing and growing our customer-focused solutions. Launching a standardized NPS measure across the businesses, which only commenced three weeks ago, plus undertaking a review of our customer experience across our digital channels, is only the beginning. Whilst other actions are critically important, we've chosen to sequence these imperatives to commence later in the fiscal year, post the work on understanding our customer experience and our NPS positioning.
New Zealand's contact center platform is now live, one that the Australian business will learn from before examining that path. Our retail customer experience has materially changed in fiscal 2025 with new staff, new promotional rotations, and new brand communication. Digitizing the business. The work undertaken in fiscal 2025 will continue as we enhance our B2B and our B2C platforms in Burson, Autobarn, and Autopro. The pricing engine in Burson went live in fiscal 2025 and was closely followed by New Zealand in early fiscal 2026. We expect to optimize and utilize both over the years to come. New Zealand has commenced its work establishing the right range by location, and Australia will follow suit during the current fiscal year.
Listening to the feedback from our customers on how to be easier to deal with is a critical element in what we need to do, and the functionality behind that needs to be built to accommodate speed, service, and accuracy. Store fitness. Retail off saw extreme levels of staff change as we went about increasing our customer-facing capability. This was coupled with minor store upgrades that will be accelerated in fiscal 2026. Early indications highlight the positive customer reaction to the enhancements that we've already made. We retain our confidence in the truck and electrical businesses, and we intend to back this perspective with increased customer-facing locations in the fiscal year we now are in. We are finalizing the development of the store staff training program, and we'll roll that out with effect in quarter two, reaching more than 500 store leaders over the fiscal year. Simplifying the business.
This is the easiest of our imperatives to say, but without doubt the hardest to do. We've begun the process of deconstructing our internal selling, and as mentioned above, our pricing tool rollout has commenced. We'll continue to further consolidate our ERPs over the next year, with two more planned for elimination. We have already been clear on the Bapcor priorities: a single approach to safety, a common view of our employees, and a single unified set of values. Our approach is to stop doing those things that do not add value and to eliminate things that detract from that mission. As you might appreciate, given our silo past, this is a significant change management exercise. Let me now turn to the individual segments. I'm moving to 16. I now turn to the segment performance.
Our largest businesses, trade and specialist wholesale, contributed 38% and 35% of our group revenue respectively, and together make up more than 75% of group EBITDA. Non-discretionary spend continues to be the lion's share of revenue split between trade, wholesale, and retail. We continue to see a shift away from discretionary retail spend, and the changes to government support for accelerated depreciation have impacted equipment sales over the past few years, both in Australia and New Zealand. During the full year, our trade business grew total revenue by 1.3%, and pleasingly, EBITDA grew by 5.4%. Specialist wholesale increased EBITDA by 5.2% year-over-year, despite the decrease in revenue and the main attribution to the significant network reconfiguration during that period. Let me now deal with each segment one-on-one in more detail. Trade. Trade has maintained market share in both the parts, tool, and equipment categories.
Looking more closely at the revenue splits for trade, parts was resilient and grew by 1.4% over the comparative period. We're making solid gains in sales to our key accounts and see further opportunity in fiscal 2026, leveraging the strength of our relationship at a store level with these customers. May and June were disappointing, with the team now very focused on recovery and sustainable performance. Tools and equipment sales were up by 0.7% versus the prior comparative. Equipment specifically is a real opportunity for us, but it requires focus and specialization. As I mentioned earlier, our network expansion continued with 12 new Burson stores across all states. In addition, we acquired the ACT-based independent parts distribution business, Motor Spares, in October of 2024. These businesses were consolidated into two existing Burson stores in the ACT. This is a model for further small-scale acquisitive growth.
Importantly, we also closed six stores that were underperforming. EBITDA was up 5.4%. EBITDA margin also grew over the full year by 66 basis points. We managed our cost base effectively, but we must concentrate on growing our top line. Investments in technology upgrades continued, with the key focus being on easing parts and parts catalogue. With a growing share of orders now being placed online, improving this platform is driving operational efficiency within Burson. Whilst a small contribution, we've stabilized our Thailand-based businesses that are now both EBIT positive and free cash generative. Specialist wholesale. This business undertook significant change over the period, including business consolidation, site closures, and amalgamations. This has been a complex change program in the short term, and no doubt has disrupted the normal business cycle, but these are foundational steps in building a simpler and more robust platform for the future.
The changes have enabled new capabilities, they've released costs, and they've improved both EBITDA and EBITDA margins. They've also changed our operational characteristics, including our culture and our safety posture. Specialist wholesale declined in revenue by 3.2% compared to the prior period. Specialist network and wholesale were down by 2.1% and 5.3% respectively. EBITDA and EBITDA margins improved over the prior period as those financial benefits of the changes flowed through the P&L. Specialist network revenue was also impacted by our JAS electrical business. JAS, formerly known as AEG, has continued to benefit from the changes we've made. This business unit was materially impacted by the change program, site closures, and also consolidations, the separation of the MTQ business from that base. We also consolidated these businesses into a single ERP.
The CVG business steadied its performance in H2, with the new management team now on board and operating that business. The wholesale set of business was materially impacted not only by site consolidations and closures, but also a complete management restructure to better operate the differing range of businesses under a single EGM. Retail. We saw declines of 3.5% in revenue, which was impacted by the difficult retail environment and the lower sale of discretionary categories. The business also undertook a focused effort to clear obsolete stock, which is now concluded, and the remaining obsolete stock is in the process of being disposed of. We've shifted between $4 million and $5 million in slow-moving and obsolete stock from within our network. We have changed our promotional cycle away from fully funded Bapcor all-store sales to pulse promotions that are supported by our key suppliers.
These have clearly impacted our total sales performance, but there are clear benefits in our gross margin. The 16% EBITDA decline was driven by lower revenues and consequent gross margin dollars, higher operating costs that include occupancy costs and stocktake losses. EBITDA margins were down 166 basis points. We invested in our retail e-commerce platform in half one of 2025. The launch of the new Autobarn website has resulted in improved customer experiences, high conversion rates, and an increase in the proportion of online sales. This is a pleasing validation of the work that was done. We've also continued to grow our membership in our Accelerate Loyalty program, which is now over 1.7 million members compared to 1.2 million- 1.4 million as at June 30, 2024.
Growing and activating this base continues to be a key focus for the team and aligns with the work that we've stated in our strategy. We're improving systems, store processes, and our people to enhance our fundamental retail capability. The most significant element of this has been the very deliberate turnover of retail staff at a store and regional level as we increase that pure retail capability. Slide 20 just highlights that after an absence of many years, we've commenced promoting the Autobarn brand. The left-hand side highlights the current big consumer promotion, and the right-hand side, the newly launched brand campaign. Very early days, but the consumer, our franchisees, and our store staff feedback is encouraging. The New Zealand economy continues to experience challenging conditions, and these have impacted trading. Revenue declines of 3.2% in Australian dollar terms relative to a 1.8% decline in local currency terms.
Our most challenged regions are north of Taupo. We're actively managing our network, closing four stores, and opening two new BNT locations in November, one in South Waikato, and the other in central Auckland. We continue to experiment successfully with differing selling and customer service models. This allows us to flex our cost structures and not only impact adversely our customer service. The commissioning of the contact center is a prime example, and the vehicle on road implementation, establishing the right range by location whilst at a very early stage, is certainly showing promise. I'll now hand over to Kim to talk through the detailed financial results.
Thanks, Angus, and good morning, everyone. I'm pleased today to present my first set of results as CFO of Bapcor. As Angus mentioned, FY 2025 was a year of significant change. While the headline numbers reflect disruption as we've progressed our strategic reset, the actions we are taking are necessary to turn this business around and return to profitable growth. Let's look at the income statement in more detail on the next slide. Statutory NPAT for FY 2025 was $28.1 million, including $52.3 million post-tax significant items, which we flagged at the July trading update following our comprehensive review of the balance sheet. More on this shortly. Pro forma NPAT was $80.4 million, which was 8.4% lower than last year. Group revenue declined 1.5%, and our gross margin of $904 million was down 1.6% on the prior year. Our trade business continued to see revenue growth.
However, revenues in retail, specialist wholesale, and New Zealand were softer. Our cost of doing business decreased by $3.7 million, reflecting achievement of the cost savings mentioned by Angus, which reduced employee and occupancy costs, largely offset by the impact of inflation, as well as increased investment in our IT systems and applications. Depreciation increased by $1.5 million due to investments made across the year. We lowered our financing costs by $2.8 million through reduced liabilities following warehouse and branch consolidation. Our pro forma NPAT was slightly below the unaudited range outlined in the July trading update following closeout of our year-end activities. Onto slide 24. As I mentioned, we recognized $52.3 million in post-tax significant items in FY 2025, of which about 82% represents non-cash items.
The final amount was $2.3 million above the range we guided to in the July trading update, again as a result of closeout of our year-end activities. The balance sheet review was undertaken at year-end. That was undertaken at year-end, considered the significant changes that occurred across business during the year. We have taken a prudent view of the balance sheet in light of these business changes, identifying several adjustments that needed to be made to the accounts. You can see the amount and the nature of these items on this slide. These adjustments were necessary, and they ensure we have a clear and accurate foundation for future growth. Moving on to slide 25 now. Operating cash flow increased to $201.7 million, up from $197.9 million in FY 2024, and our cash conversion rate lifted to 81.8% versus 76.9% in the prior year.
Importantly, our year-end working capital position reflects our normal operating conditions, with no DC closures in the lead-up to the end of the year and with regular accounts payable flows. We have programs in place across FY 2026 to now optimize our working capital balances. Capital expenditure rose 3.9% to $61.6 million, primarily attributed to investment in foundational technology projects that will support future efficiency and growth. The CapEx also includes $9.7 million invested into the three state-based distribution centers and 21 new branches and stores. Pleasingly, we generated positive free cash flow of $20.9 million, an increase of $31 million on the prior year. Dividends paid during the year were $45.8 million. Turning to the balance sheet. As mentioned, we undertook a detailed review of the balance sheet after the year-end to ensure our financial position accurately reflects our operating model going forward.
I've already talked to the significant items reported on the income statement. The review also resulted in the FY 2025 opening retained earnings reducing by $25.5 million. This relates to correcting the recording of prior year intercompany loan transactions, as well as to reflect a change in our accounting policy for inventory costing now that we have centralized a significant proportion of our distribution network. We are required under accounting standards to restate our prior period results for both of these changes, which were announced in our July trading update. Our net working capital balance reduced year on year, driven by better accounts payable trading returns, particularly with international vendors. Inventory increased to $546.3 million, up from $529.1 million at the end of the prior year.
This reflects the rebuild of the low closing inventory balance from last year, which, as you may recall, domestic deliveries were paused in the final weeks of June last year. It also reflects inventory for the opening of 21 new branches and stores across the business. Assets and liabilities held for sale reduced significantly following the completion of the MPQ divestment in November 2024. On slide 27, you can see that we successfully refinanced $170 million of debt that was due in July 2026. This includes temporarily upsizing our committed debt facilities by $100 million- $820 million, which we will use to repay the remaining $100 million facility that's maturing in July 2026. Our next debt maturity beyond that is nearly two years away. Our net debt increased 8.2% to $364.8 million, with a leverage ratio of 2.13x EBITDA, which is well within our covenant limits.
We have over $340 million in unborrowed committed facilities and an average remaining tenor of 3.3 years. Our fixed charge cover ratio and our interest cover ratio remain strong. Our funding profile provides us with the flexibility and headroom to support our strategic reset and our growth initiatives. We're confident in our ability to fund future investment through disciplined capital management. With that, I will hand back to Angus for the summary.
Thank you, Kim. Before closing and moving us to questions, let me touch on our indicative scorecard and a picture of activity in 2026. On the 28th of April, I outlined an indicative scorecard for the business. The base fiscal 2025 year is now complete, save for the customer NPS measure. We'll determine that baseline over the next four to five months, with our NPS tool having only recently gone live across our organization. The indicative fiscal 2030 measures remain unchanged, save for safety, where the original target of less than 14 is no longer relevant given the fiscal 2025 outcome. Fiscal 2030 indicative target has therefore been modified to less than seven. I remain of the view that we have an unrivaled business platform and brand portfolio that serves multiple segments in large, addressable, and growing markets.
Our strategy is only three months old, so our focus on delivering the strategy must be ruthless. The six imperatives are what matters. Performance and outcomes will come, but given the task at hand, we're going to pace our actions to deliver sustainable growth. There are multiple levers to drive organic growth: sales, and GP dollars. These will be our focus. There may be inorganic options, and we will pursue those as appropriate. Operating efficiency from supply chain improvements and digitization will help balance our cost of doing business, and the steps already taken stand us in good stead. Cost benefits from business simplification, from network rationalization, are clear. Our job is to maintain those taken and extract more as required. We have a good balance sheet with positive cash generation capacity, both of which are critical to disciplined capital allocation.
Following the resignation of the three non-executive directors in July, we've accelerated the existing board renewal process and have well progressed with a high-quality pool of candidates. I will not be providing formal or informal guidance for the current fiscal year. The degree of change that we have initiated and the things that we are doing makes that simply too challenging. I will, however, state that we expect fiscal 2026 end part to skew towards the second half. With that, I'll now hand back to Lynette to facilitate questions.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is the star key followed by the digit one. We'll take your first question from Jack Lynch with RBC.
Hi, Angus and Kim. Thanks for taking my questions. First one, just on the trade segment. I appreciate you're not giving guidance for FY 2026. Just on my numbers, it looks like the second half implied like for likes are improving. Just trying to marry that up with the challenging May, June that you've had and your comments around a recovery as a key focus for the business, just how it's sort of tracked since that May, June period.
Hey, Jack. Thank you for the question. I appreciate that. Look, the team within, I'll say Burson, but trade, is very focused on making sure they recover from May and June. Our focus for H1 is Simon getting across what he needs to around that business and making sure that the strategy within Burson particularly links to the group strategy. Primarily, as I think I said in my, not I think, I know I said in my words, it's driving that sales performance and the GP dollar delivery in that business. Big business, it's the heartbeat of what is Bapcor, and that's the focus that they've got today.
Very clear. Thank you. Maybe just on the costs in the second half, a little bit more allocated or put into the trade segment relative to the specialist wholesale, which was a bit better than where the market was seeking. Just the moving parts there as we head into FY 2026 and how we should be thinking about the cost base there.
I'm probably going to say to you, as we head into FY 2026, you know, a piece of work we've got to do is around the restructure of the organization. What I said in my opening comments around giving a restated FY 2025 and FY 2024, obviously that has to be delivered. I wouldn't get too hung up on the way the second half costs have played out just yet. We've reorganized the business relatively significantly. We'll make that clear in H, if so, in quarter two.
Thank you. The job back in the queue.
We'll hear next from Craig Woolford from MST Marquee.
Good morning, Angus and Kim. I just wanted to understand the outlook that you're presenting. Obviously, you're a bit cautious. When should we expect that you can get to a cadence that shows the CAGR that you're aiming for on your five-year scorecard with 5% sales CAGR and 10% EBITDA CAGR? Hey, Craig, thanks for the question. Firstly, as you've seen, we're not providing you guidance for 2026. I'm committed that we will, as our results conversations come back to that scorecard and give people a view on our trajectory towards what are those five-year goals. I stand by that position. You'll start to hear us talk more and more at increasing levels of detail as we go through what will be 2026, 2027, 2028. That, all things being equal and going correctly, will show that we are heading towards those indicative targets, but not going to do anything today.
Okay. With regards to that reallocation that's coming, I know we have to wait to see it, but in layman's terms, what can we expect? What does it say about the margin performance of each of the divisions? Look, directionally, the two things that we need to get right as part of that restatement. Firstly, it will be allocating margin based upon where the sale actually gets made. I'd indicate that would see our trade segment increasing its margin in our financial statements. That will clearly be the cost of our specialist wholesale division as described today. The second component that we'll need to get right is the overhead that goes with that because there's clearly activity that occurs within that segment, as in the specialist wholesale segment today, that needs to be reshuffled predominantly between trade and retail.
The two pieces are a margin move into trade, offset marginally, excuse the double up there, around some cost movements. Okay, thanks. If I could, the last thing I would, because the company's always focused on EBITDA, there are some parts of the business that have quite a big lease payment and therefore a lot of use asset and amortization. Is it possible to get EBIT across the divisions or is that something that we could explore? I would expect that the EBIT results, in other words, after leases or EBT results, even better, could look quite different. Yeah, Craig, let me take it on another. My preference, I appreciate the wonderful world of lease account standards, but my preference is always to show as close like annual cash position coming out through EBITDA, but let's take that on board.
Thanks, Angus.
As a reminder, ladies and gentlemen, that is the star key followed by the digit one if you have a question or comment. We'll hear next from John Campbell from Jefferies.
Hi guys, thanks for taking the questions. Just a couple. I couldn't see in the presentation that you had any update on trading conditions in the first eight weeks or so of the new financial year. Would you be able to provide us with how sales are going in the first eight weeks?
You're right, it's not contained in any of our material, and I'm not a thinker. I think I know I said this when we were chatting at the April strategy release. You know, we're going to move away from providing those sort of six, seven-week glimpses because it's only six, seven weeks of whether it be a full year or half year, and I just think it's misleading. We're not intending to provide that.
Yeah, okay, fair enough. Your loyalty program started within Autobarn, started relatively recently, and obviously you're showing good growth in that now. I know that Supercheap, I think their group loyalty program provides something like 60%- 70% of their total group sales. Could you share with us exactly how impactful though that sort of Autobarn loyalty program is in terms of the share of sales that it's providing? I obviously understand that it's early days at this stage.
Yeah, so two comments is that yes, very, very early days, or three comments, very early days. I'm actually delighted in the list, it's fantastic. I actually don't have the number, so I can't give that to you, I just don't have it at hand. It's an important part of that mix though because you know customers today, frankly across retail and also trade, they need to determine how they want to transact with us. You know, what's just easiest for them in the moment they need to make that acquisition. An important part of that is then understanding how they shift between those two mediums. I don't want to get too carried away, call it with just purely growing only digital sales, but it needs to, particularly here in 2025, become a substantial proportion of that business.
You can see that we feel that way given it's a measure within our indicative scorecard.
Okay, thanks. I guess follow-up question would be, you're pretty happy with the design of the loyalty program as is? Like it doesn't, you know, you've got all the parameters right and it is sort of effectively now just outgrowing members. Would that be fair?
I'm probably going to go 60%, 70%. Particularly, Megan and I were chatting around, you know, what that mechanism is. I'm happy with where we are today, but I think there's stuff that we just need to open our minds up to make it more differentiated compared to other loyalty schemes. That would be an area that you can expect us to keep challenging.
Okay, thanks for that, Angus. Just one last question, sorry, and then I'll give up. Within your commercial vehicles group and truck parts, could you comment on, are those businesses required in the last five years, but are you, I guess, happy, and that might be a bad word to choose, but where that truck parts business in particular is positioned and whether your market share is stable, declining, or growing? Any comments around that would be helpful?
I will grab your word happy. I'll probably just go no, I'm not happy because I genuinely believe the CVG business, our truck business, and now what we call JAS, our electrical businesses, I do believe they are growth levers. What I'm not happy about is they're not growing fast enough. To your share question, I actually don't know, I don't think we really know the answer to share. That's such a fragmented world that there's no measure I can literally grab at. I suppose I'll just simply go, I expect them to grow faster than they have currently shown. That's the intent.
Okay. You sort of see a pretty good pathway within those businesses. You see them as core, I guess, is what I'm asking.
Yeah. CVG, new brand, or brand new management team over the course of the last fiscal year. The JAS business, we've just appointed a new leader to that business. She only started with us maybe two months ago. These are opportunities for our organization that we need to get after.
Yeah, okay. Thank you very much, Angus. I'll pass it back.
We'll move next to Stewart Oldfield from Field Research.
Oh, g'day, Angus. And Kim, perhaps just on that CVG business, because I hear you say you'd like to grow its footprint. It's great to hear that you want to grow the trade footprint, but past ambitions with the truck parts footprint, I think past management wanted to grow it out to 100 stores, proved ill-considered, and the leading player in the sector has actually got fewer stores than you do now. Why would you be keen to grow the footprint from here? Short answer, yes, I would like to grow the customer-facing elements of truck and electrical. That doesn't necessarily mean the warehouse footprint, but I think it's fair to say that for those businesses to be closer to the customers that they serve, and they have different customer bases to our trade business, we believe that's important.
As I've signaled in my words, we are looking to expand the customer-facing presence over the current fiscal year, but just because they're not necessarily the stock-based locations.
Got it. For a customer-facing presence, you'd like to have 40 stores, 50 stores?
I'm letting the team, as I said, distribute to that pretty new. They'll come back and determine what that looks like. A fair question to ask is that, you know, in six, 12 months' time. Right now, you know, I'll let that team determine what that looks like.
Sounds good. Whilst you're targeting growing businesses, you've got a 4WD off-road presence with Opposite Lock. It's been sitting there for many years. How do you view that business, its prospects, and its place in the portfolio?
It is serving a purpose now in our portfolio. Really, just given what we've seen happening with four or five generically across the market, we are looking at outplay. When I look at what it's delivering today, its performance has certainly stabilized over the last 12 months. Like any part of our portfolio, the question that we're going to continue to ask is, is it actually serving the base business appropriately? I said that goes for any part of the portfolio within retail, wholesale, specialist, etc.
Got it. Thanks for that.
We'll move next to James Bales from Morgan Stanley.
Hi, Angus. I wanted to come back to a comment that you made on market share in trade. I think you were sort of calling that that had been stable. On my calculation, GPC outperformed you guys on sales in the fourth quarter by at least 15% at a group level. Can you maybe unpack the divergence there and how we should think about where market shares trended across trade and retail?
Yeah, no, thanks for the question. When I refer to market share, the only measure I've got is what Capricorn would give us. That's the only, call it, base. When I look at where we compete in Capricorn relative to our competitor, my comment is relative to where we have a common competitive ground, and hence my over a 12-month period view of share. I said at the July update on significant items, I said that we clearly had lost share in the May and June months. That remains factual, but over the 12 months, our share was stable. I would not walk away though from just the simple observation of the Australasian numbers I've seen our competitor publish. They are at a revenue level higher in growth terms than our trade business.
By definition, across all the things they do relative to what we do, our business did not grow at the same rate. There are elements though of our competitor's business where we just don't play. We just don't have a presence, don't trade with the clientele, smash repairs, mining, etc. They've got a far broader revenue base than we did.
Okay, got it. Maybe just, you know, you've gone through a whole bunch of reviews. You're sitting in the number three position in retail against two very competent competitors. What does success look like for the retail business in terms of some of those goals you set for 2030?
I suppose the hallmarks of success in a retail business is I want comp store sales growth. I want a, ideally, I would love a growing footprint, but we're not ready to grow our footprint today. I want overall sales and margin improvement, and margin, I'm talking gross margin, EBITDA, and also the earlier question, EBIT margin improvement. Fundamentally, it's on two scales. It's comp stores, and I want comp stores to be growing a lot of the yearly. I guess we eventually hope we'll get to a place where we'll grow the absolute footprint. I want overall sales to grow faster than our comp rate. Those are the hallmarks that I'm looking for. I can then dive down in terms of market share, you know, to the degree we measure that, basket size within store, transactions at the store level, and I can get quite granular there.
Right now we've got a business that has not grown across any of the lines of the pinner. It needs to grow. Because we're not adding to the network, it ultimately has to be, it's a comp store measure. That's the ultimate picture that we've presented today.
Yeah, I guess.
Probably the last thing I would just say, you know, you mentioned that we've done multiple reviews on retail. I'm only across to one that we did as we came into the April strategy announcement. That's the reset that we've been doing in retail. I don't know about the other retail reviews. My conversation is very firmly focused on the review that was concluded as we came into April.
Okay.
Mr. Bales, do you have anything further?
No, that's fine. Thank you.
As a final reminder, ladies and gentlemen, that is the star key followed by the digit one. We'll move next to Mitch Sonogan from Macquarie.
Good morning, Angus and Kim. Thanks for taking the questions. Maybe just following on, I guess, staying on the retail business. Angus, apologies if you've gone through this, I was jumping in from a different call. Just on the site reconfiguration slide, obviously there's a lot of different things happening in the specialist wholesale business. On retail, there was only one site closed and three relocations. In terms of the differential in profitability across, I guess, the worst quarter of the stores versus the top, is there a big differential there and you could actually look to shut down some stores to more quickly drive that profitability? I'm just wondering what are the key factors as to the biggest underperforming stores in the retail network? Thanks.
Yes, in the year we only closed down one. We did say that we would, as an outcome of our retail review, be looking to close stores in the current year. We will continue to do that. I can actually say we have closed, I'm just looking at the term across here, certainly one and maybe even two that we have done. We've closed two stores since July 1. We actively will do that. Closing a store from our perspective is, you know, we're going to be clear on how we do that. Much of this network obviously is corporate. There are franchise stores in there, which we will address as required and as they play on. To the rest of your question in terms of the differential between these stores, we've never provided that kind of information.
I'm probably not of the mind to do it right now given the competitive sensitivity to that. I think I've been very clear in my words today and in others, my words today. An active part of managing a network, whether it be retail, trade, or other, is not just adding to it, but actually closing sites down. I think you can see, as we've announced these results, we have closed stores across our wider network in fiscal 2025. That will continue in 2026, not just as 2025 did in our trade businesses, but equally in our retail business. We actively need to manage the network, not passively allow it to occur.
Yeah, and you probably did cover this, but just in terms of the cost savings, it was good to deliver those within the range at $27.5 million. Can you remind me of any expectations we should have going into 2026 at either or both gross and any net benefits? Thank you.
We've been clear, which we said that our exit rate was at $40 million gross. We haven't given you a net, but we said back in April that we would be choosing to reinvest some of that back into our bottom line. Clearly, you know, just inflation and other things will take care of an element of that cost delivery. Our exit rate gross on the 2025 year was at $40 million, which was what we said it would be.
Yes, okay, very clear. Just final one on the trade segment. EBITDA margins, pretty resilient and up a little bit, pushing towards 70%. In terms of just looking out for the next couple of years, if you maintain your market share and the market grows at low to mid-single digits, should we be expecting those margins around that level about right, or do you see upside? Just trying to understand how you're thinking about the opportunities internally versus where the margins are currently. Thanks, guys.
Look, if I had to chase this out the way I think, I mean, yeah, I think they're very healthy margins. I'm frankly not looking to grow them in that sense. You know, you should not expect all of a sudden us to be adding, you know, basis points to that number. I certainly want to maintain margin, don't get me wrong on that. My focus and what I've asked Simon to focus on is growing the top line, as in revenue, and growing our gross margin dollar delivery. We can do that holding margins, that would be a spectacular outcome. I'm not looking to grow percentage. That, frankly, that just might look good on the side, but it actually is counterproductive to growing that top line.
We'll move next to Elijah Mayr from Goldman Sachs.
Good morning. Just a couple of follow-ups, I guess. Maybe just on the FY 2026 end part to be skewed and randomly not giving specifics, but can you give us, I guess, a little bit of color or the assumptions that go into that in terms of that second half skew? Can you get there without sort of sales growth improvement, or is that kind of driven by the cost improvements and operational improvements that are going to come through in that first half and into that second half? Just any comments around thinking of that skew would be helpful.
Elijah, just make sure I heard. There's a bit of background noise there. I think you're saying, without giving further guidance, which I won't, just sort of can we get to that skew that we've described the second half? Can we get there without sales growth, or are we relying, I think, on cost benefits? I think that was the nature of your question. Is that right?
Yeah, correct. Just some of the assumptions, I guess, that go into that second half skew. If that's going to be cost-driven, or are you expecting sales growth to return after kind of slowing down in that May-June period?
Yeah, so it'll probably be two parts to it. When we gave the range of the cost savings, you know, we always have said that circa 50% of those cost savings came from just the pure headcount reduction. We obviously did a lot of that at the very end of the fiscal 2024 year. Those cost savings have been delivered and we just have to maintain the right base. Our focus around the consolidation work that we've done that drives the balance of our cost savings is now bedding that down. Sites that closed in July of fiscal 2025, we're already lapping the benefit. Others that have closed in the last quarter, last month, we'll continue to get that. Those cost savings, if you like, will taper through the current year.
The focus for driving the skew that we've described is coming from reigniting the sales growth in the organization through one, organic sales, but two, equally, as we've opened sites in the back half of 2025. We have an expectation that we'll see that flow through the P&L positively in the current fiscal year.
Thank you. Maybe just one more on retail. On the strategic imperative slides in 2025, you're sort of calling out that the Autobarn stores had around 45% new store managers coming through in FY 2025. Was that large turnover driven by Bapcor, or is that people leaving? Do you have any broad comments on the background of the incoming store managers and where they come from, if they're within the auto space or in other retail areas, broadly?
I will be really clear. I'm sad to say that most of that turnover was at our initiation, you know, where we have moved store team members on. We've done that for, you know, multiple reasons, but fundamentally, it's around a lack of capability. The people that we're bringing into the network do come with retail capability, and therefore, you know, that's what we've been looking for in hiring.
No problem. Thanks.
We'll move next to Sam Teeger from Citi.
Hi there. Thanks for taking my question. Just wanted to explore the market share losses that you mentioned at the end of the financial year. What do you attribute them to? Have you talked about if you've been able to address that in July and August this financial year?
Hey, Sam, good to speak to you. May and June were poor months for trade. I said when we spoke to you around July to the market, we took out a couple of big promotions in our trade world over those two months, just did not perform. The market share losses in those two months pretty much land fairly on that lack of performance in those prime months. The focus for quarter one, quarter two is around addressing that. That's what the team are and have been focused on. I wish I had a better reason other than we failed to perform in those two months.
Got it. Just to help me understand, in a trade business, which is mainly selling to mechanics when cars are coming in for service, what products typically would go well on promotion? I would have thought that most mechanics just buy the products when the cars come in.
Sam, we had a number of one-day sales in that period of time. You know, it's a point of view, a one-day sale in my mind is perhaps not the ideal trade-based promotion, but that's what we had in place. It's everything in there from people pulling purchases, if you like, forward and backward. It is tool sales and to some degree equipment sales in there. When you look at our, particularly our equipment sales number for the full year, you can see that it is, you know, it is adverse to where we were in terms of growth over the prior year. I would probably support your point of view that this business should be a relatively steady deflation business rather than one that is promotionally orientated. We've changed our, Simon is in the process of changing that point of view inside of the Burson Auto Parts business.
Got it. Thanks. Last question, I came from the other call that Mitch did, so we missed the start of it. Just on the guidance, have you said if you're expecting profit growth in 2026 on 2025, or is all that you've said there's going to be a skew in terms of the profit dollars second half to first half?
No, it's literally the latter. We've talked to the skew, nothing more.
Okay. All right. Thank you.
At this time, there are no additional callers in the queue. I'd like to turn the conference back over to Angus McKay for any additional or closing comments.
Thank you. I told everybody on the call, thank you very much for listening in. We appreciate the questions. For those who catch up with us over the next sort of three to four days, we look forward to seeing you then. Thank you for dialing in and participating.
That does conclude today's teleconference. We thank you all for your participation. You may now disconnect.