Halfords – Recruitment Challenges Put The Brakes On Sales

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Halfords Group plc (LON:HFD)’s revenue rose 10.5% in the first 20 weeks of the financial year. Compared to pre-pandemic trading, revenue rose 18.7%, or 16.8% on a like-for-like basis. That reflects double digit growth in all business areas.

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The group warned of challenges, including cost inflation, freight disruption and capacity issues, as well as recruitment challenges among technicians and HGV drivers.

Halfords still expects to achieve full year pre-tax profit of over £75m.

The shares fell 1.7% following  the announcement.

Halfords' Slowing Sales Growth

“Covid related absences and other recruitment challenges are slowing sales growth in Halfords’ important Autocentre business. The group relies on an army of technicians in its garages and mobile vans, and the dent in the workforce has held performance back. That said, progress has still been remarkable, with the group revving up their market share in the first few months of the financial year.

The core motoring business is also having a pleasant ride, largely thanks to the huge increases in staycations brought on by Covid. Sales of the basics like bulbs and blades, as well as travel accessories, have fared particularly well, as the UK geared up to hit the motorways over the summer.

Halfords’ full year profit ambitions remain on track, but there are some things to consider. Cycling is a real growth opportunity, but the group’s being held back by supply chain problems. Not being able to offer the right stock, or enough of it, is inevitably putting a lid on progress in the division. These are unlikely to be resolved soon. The other thing to keep in mind is that staycations are likely going to become less popular as and when the world gets back to normal. What this will mean for sales in the next summer season is yet to be seen.”

Article by Sophie Lund-Yates, equity analyst at Hargreaves Lansdown

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