Halfords has seen a surge in pre-tax profits during the first half of the new financial year, posting revenues of £694.8m for the 26 weeks to 1 October 2021, up from £638.9m in the same period of last year. Pre-tax profits grew from £55.4m to £64.3m.
The Top100 retailer in RXUK Top500 research has also seen strong growth in both its online and B2B businesses, each delivering around 75% and 81% growth respectively across the past two years. As a result, the Group upgraded its full year underlying PBT forecast from £70 million to £80-£90 million, alongside announcing an interim dividend per share of 3p.
Much of the growth has been driven by cycling and electric modes of transport. The retailer’s core retail motoring revenue saw an uplift of 7.7%, sales in the motoring and cycling categories increased by 88.8% and 8.8% respectively.
Chief executive Graham Stapleton comments: “In cycling, demand levels remain good, and we are pleased with the current availability of kids bikes and e-bikes as we head into the Christmas trading period. We have carried good sales momentum into H2 across our business, supported by the easing of supply chain disruption. This has enabled us to increase our FY22 underlying profit before tax guidance to between £80m and £90m.”
He continues: “We are seeing significant growth in the number of customers choosing electric forms of transport, and we continue to have a market-leading position in the servicing and repair of electric vehicles.”
He says: “Sales of e-bikes, e-scooters and accessories grew by more than 140 per cent on two years ago, and servicing for electric cars in our garages was up 120 per cent year-on-year. We have already invested in the training of more than 1,300 electric technicians and are on track to train 2,000 by the end of FY22, equating to more than two per store or garage. This number will double next year.”
Stapleton concludes: “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.”
Analyst Russell Pointon, Director at Edison Group, adds: “The Group’s performance was partially driven by good growth across key strategic areas, with group services, online and B2B revenue up by 75%, 81% and 78% respectively. Although Retail Cycling revenue fell by 20.5% on a like-for-like basis against FY21, Retail Motoring grew by 6.2% over two years thanks in part to the staycation boom. The Autocentres business demonstrated the progress of Halfords strategic focus on motoring, with sales almost doubling over two years, whilst an increase in sales and servicing for electric vehicles indicates that the Group are well-placed to capitalise on more environmentally-conscious consumer habits.”
Pointon concludes: “The decline in cycle revenue reflects a combination of high sales last year and the impact of supply chain issues being felt across the sector. However, the Group hope to see a normalisation of availability in time for the festive period and remain confident of their ability to navigate wider inflationary pressures as well as ongoing production delays. The Group emphasised that its long-term strategic focus on services, B2B and retail motoring will provide foundations for a strong operating model that will help weather the storm of a macroeconomic outlook that remains uncertain. Looking ahead, investors will keep a keen eye on whether this strategy fulfils its promise, but these results should inspire confidence.”
