Halfords – Profit Guidance Disappoints As Trouble Lies Ahead
Halfords Group plc (LON:HFD)’s full year revenue of £1.4bn was 6.0% higher than last year. Compared to pre-pandemic levels, that reflects growth of 19.9%, with like-for-like sales up 16.7%. Growth over 2-years was mainly driven by Autocentres, where the group’s made several acquisitions.
Underlying profit before tax fell 9.7% year-on-year to £89.8m, on a 2-year basis that was 57.8% higher.
Q1 2022 hedge fund letters, conferences and more
In the year ahead, Halfords is expecting “reduced demand, particularly for more discretionary, higher ticket items, and significant cost inflation”. Underlying profit before tax for the new financial year is expected between £65-£75m, but the group said things remain uncertain.
The board has proposed a final dividend of 6p.
The shares fell 20.1% following the announcement.
Halfords' Earnings
Matt Britzman, Equity Analyst at Hargreaves Lansdown
“All eyes today will be fixed on the outlook statements, where management point to lower demand and significant cost inflation as the reason profits are expected to fall c.23% next year, and markets have reacted badly. With a cost-of-living crisis hitting consumer wallets, demand for higher ticket items is heading for trouble and we’re seeing a continued unwind of some of the lockdown tailwinds, such as the cycling boom that helped performance last year.
Halfords are in the midst of a strategy change and several acquisitions have helped push motoring revenues up to around 70% of total sales. The less discretionary nature of motoring services should help give some protection from cash strapped consumers closing their wallets. However, the pain is coming a little too soon, with a number of newer acquisitions yet to be integrated and the new strategy still a way off being complete.”
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