Halfords sees FY profits at lower end of guidance, shares tumble
By Michele Maatouk
Date: Wednesday 23 Nov 2022
(Sharecast News) - Halfords warned on Wednesday that full-year underlying pre-tax profit was set to be at the lower end of its guidance range as it pointed to a "softening" in more discretionary areas of spending.
"Since the period close, we've continued to see resilient trading in the more needs-based categories, but there has been a softening in the more discretionary areas," it said. "It remains challenging to predict consumer confidence for the remainder of FY23, but we don't expect the challenges that businesses are facing to dissipate soon."
As a result, the retailer now expects full-year underlying pre-tax profit to be at the lower end of its £65m to £75m range.
In an update for the 26 weeks to 30 September, Halfords said underlying pre-tax profit fell to £29m from £57.9m in the same period a year earlier, while revenues rose to £765.7m from £694.8m. The company pointed out that the previous year included business rates relief of £9.2m.
The group said all segments delivered like-for-like revenue growth over three years compared to 2020, with Autocentres up 30%, Retail Motoring ahead 10.2% and Cycling 8.6% higher.
Chief executive Graham Stapleton said: "This has been a period of strong strategic progress and resilient financial performance for Halfords. In such a volatile macroeconomic environment, our strategy of focusing on the kind of predictable and recurring revenue that comes from motoring services and needs-based products has never been more relevant."
At 0810 GMT, the shares were down 14% at 183.34p.
Matt Britzman, equity analyst at Hargreaves Lansdown, said: "A slight weakening in the outlook for profit is never ideal, and markets have reacted badly, but weakness was bound to make its way through to performance given the scale of the macro challenges.
"Longer term, we're supportive of the strategy shift, the old business was heavily reliant on cyclical revenue streams and recent changes increase exposure to more reliable sources of income - rarely a bad thing."
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