Halfords says it now expects full-year profits to come in at almost double the previous year, despite the impact of Covid-19 and related lockdowns, following stronger than expected January and February sales.
The multichannel retailer, ranked Top100 in RXUK Top500 research, today says sales in the first seven weeks of its fourth quarter have been stronger than expected. It now expects full-year pre-tax profits to come in at between £90m and £100m – after taking into account its decision to repay the £10.7m of furlough income it received from the UK government. In the year to April 3 2020, pre-tax profits came in at £52.6m, down by 4.9% compared to the previous year, although the company said at the time they would have come in at £55.9m had last year been a 52 week, rather than a 53-week, year.
Group sales grew by 6.2% in the seven weeks from January 2 to February 19, with retail up by 5.1% and auto centres by 13.3%. Retail sales were boosted by strong demand for bikes and other cycling equipment (+43% like-for-like (LFL)). Its performance cycling business Tredz is seeing “exceptional growth”, with sales 60% up on last time.
Motoring sales (-14% LFL) remain down on last year, but ahead of what Halfords says it might expect given that car journeys are currently 40% below pre-pandemic levels during the third lockdown. The strong sales came despite supply chain delays caused by factors including port disruption ahead of Christmas, and shipping containers not being in the right places.
“Although only six weeks remain of FY21,” Halfords said in today’s trading update, “the expected profit range remains quite broad as trading patterns continue to be volatile, with sales ahead of Easter particularly difficult to predict whilst the UK remains in lockdown.”
Ecommerce will likely be a major contributor to the retailer’s full-year figures, after growing strongly earlier in the year. Halfords’ online sales grew by 76% in the third quarter of its year, following a summer in which digital sales more than doubled.
Commenting, Jonathan Rock, retail analyst at GlobalData, says, “Cycling continues to be a shining point for the specialist, seeing 43% LFL growth – an increase on the 35.4% seen in Q3 – as the lockdown drove consumers back to cycling. A recent GlobalData survey showed that of consumers who had cycled more since the pandemic began, 75% said that during the 2021 lockdown they have been cycling even more than usual. Halfords noted the success of its performance cycling business Tredz (60% LFL growth), as well as its range of kids and adult bikes, showing strong sales across the cycling board. The specialist also stated that while supply disruption for cycling had eased, possibly contributing to the uptick in growth in Q4 so far, it remains ’sub-optimal.’”