Halfords pushes higher on lifted profit guidance

·Reporter
·3 min read
Halfords pushes higher on lifted profit guidance
Halfords, which has also seen a strong rise in demand in cycling during the pandemic, said it had good availability of children’s bikes, and electric bikes for the Christmas trading period. Photo: Molly Darlington/Reuters

Shares in Halfords (HFD.L) surged by more than a tenth on Wednesday after it raised its full-year guidance, and reported an easing of supply chain difficulties.

The bikes-to-car parts and servicing retailer now expects full-year profit of between £80m ($108m) and £90m, compared with its previous guidance of £75m.

The company posted a growth in revenue of 19.2% to £694.8m, versus its full-year 2020 figures, driven by a rise in turnover of 88% in its Autocentres division.

Underlying profits before tax also nearly doubled to £57.9m, driven entirely by retail, although this included the benefit of £9.2m of business rates relief, without which profits would have risen 61.3%.

Halfords, which has also seen a strong rise in demand in its cycling division during the pandemic, said it had good availability of children’s bikes, and electric bikes for the Christmas trading period.

Halfords shares jumped 10% on Wednesday. Chart: Yahoo Finance
Halfords shares jumped 10% on Wednesday. Chart: Yahoo Finance

Sales of e-bikes, e-scooters and accessories grew by more than 140% in the first half of the year compared to the same period two years ago, before the start of the pandemic.

It said it was on track to train 2,000 technicians to work on electric vehicles by the end of its financial year.

The group also declared an interim year dividend of 3p per share, compared to no dividend last year.

“We are delighted to have delivered a strong H1 performance, driven by market share gains in motoring products, garages and our mobile services business, which now account for more than two thirds of our revenue,” Halfords chief executive Graham Stapleton said.

“There is good momentum in our existing business, the strategically important area of motoring services continues to grow strongly, and our recent acquisitions are all performing well. As a result, despite the challenging trading environment, I am very excited about our future growth prospects.”

In September, Halfords warned that the supply chain disruptions were affecting performance. Some of the issues Halfords faced included factory production constraints, rising commodity prices, transport disruption, and recruitment issues among technicians and heavy goods vehicle (HGV) drivers.

Read more: Halfords bike sales hit by supply chain disruption

It said it also had to deal with some disruption from COVID-related staff absences.

"Moving anything around the globe over the last six months has been particularly challenging," the company said on Wednesday. It added that freight costs in some instances have been ten times the normal rate amid a shortage of lorry drivers in the UK.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Overall...these are good numbers, and support our long term belief that Halfords’ mixed online and bricks & mortar offer makes sense in an increasingly digital world.

“With management increasingly focused on upskilling its workforce to deliver great service as well as good products that fundamental strength should grow. Together with diminished supply chain disruption that bodes well for the second half of the year.”

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