Halfords lowers FY23 profit expectations despite ‘resilient’ performance

Halfords Group plc has announced it has downgraded its profit expectations for the year despite seeing its profit before tax increasing 49.8% to £96.6m.

In its preliminary results for the 52 weeks to 1 April 2022, the retailer posted revenues of £1.36bn – up almost 20% compared with pre-pandemic levels. It also saw an increase in market shares in retail motoring and autocentres with a revenue of 6.5% and 91.9% respectively. Despite supply chain disruptions, cycling growth also experienced a 2.7% increase.

In addition, the group made three acquisitions during FY22, which has made it the largest motoring service provider in the UK with over 70% of revenues now coming from motoring and almost 40% from other services. 

In its FY23 outlook it said that over the last three years, it has “built a larger and stronger services business and focused more heavily on motoring”. As such, it said the group has a “much higher ‘needs-based’ revenue stream”, improving its resilience in the current macro-economic climate. 

However, it added the “transformation journey is not complete” and therefore the firm is “not immune” to the external challenges, with reduced demand, particularly for more discretionary, higher ticket items, and “significant cost inflation” impacting its financial performance.

As such it now expects FY23 underlying PBT to be within the range of £65m to £75m.

Graham Stapleton, chief executive officer, said: “The strength and resilience of this performance shows Halfords’ transformation over the past two years. Our shift towards motoring services has delivered more predictable and more sustainable returns, and our acquisitions of Iverson Tyres during the year mean that we are now the UK’s largest motoring service provider. 

“Motoring represents over 70% of Halfords’ total revenue, and our products and services in this category tend to be needs-based rather than discretionary and will help us to navigate our way through the well-documented macroeconomic uncertainty that we are currently seeing.”

He added: “We are continuing to play a key role in helping consumers to choose electric forms of transport and are constantly investing in the training and upskilling of our technicians in this critically important area. Sales of e-bikes, e-scooters and accessories were up 74% two years ago, and servicing for electric cars in our garages was up 140% year-on-year. 

“We have also rolled-out free electric bike trials to encourage customers to make the switch and are the first mainstream retailer to offer an end-to-end EV charging solution for the home.”

He concluded: “While rising inflation and declining consumer confidence will naturally present short-term challenges for any customer-facing business like ours, we remain confident in Halfords’ long-term growth prospects due to our service-led strategy and the enduring strength of our brand, people, products and services.”