Halfords – Profits Upgraded As Signs Supply Chain Disruption May Be Easing

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Halfords Group plc (LON:HFD)’s first half revenue came in at £694.8m, 19.2% ahead of what the group reported before the pandemic. That reflects good progress in Retail and very strong growth Autocentres following acquisitions to support the Halfords Mobile Export offer.

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

The group has upgraded full year profit guidance to £80m-£90m, compared to previous guidance of more than £75m.

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

The shares rose 12.2% in early trading.

Halford's Full Year Profit Guidance Upgraded

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:

“A very strong set of results in Halford’s retail business has seen full year profit guidance upgraded – no mean feat given the disruption the group has faced. Retail sales have climbed despite the closure of some 40 stores over the last two years, reflecting significant overtrading by remaining stores and resulting in substantially lower costs. The shift of gears to online has paid off here and as a result retail profits have more than doubled.

Autocentres are less promising. Despite recent acquisitions boosting revenues substantially, profits have gone nowhere. The group expects an increase in lucrative MOTs in the second half to improve profitability, but 2.4% operating margins in a business where revenues can be volatile is as much of a risk as an asset.

Overall though 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 increasing focussed 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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