Halfords (LON: HFD) shares fell more than 13% at the start of Wednesday’s session following the publication of its first-half results, which saw the company’s pre-tax profit impacted by inflationary headwinds.
YOUR CAPITAL IS AT RISK. 68% OF RETAIL CFD ACCOUNTS LOSE MONEY.
The stock hit a low of 182p after closing Tuesday at around 213p per share. At the time of writing, it is down almost 7% at 198.8p.
Halfords reported a pre-tax profit of £29.3 million, coming in significantly lower than the £64.3 million reported in the same period last year. The company said cost inflation and low customer confidence weighed on pre-tax profit.
Despite the declining customer confidence, Halfords’ revenue increased to £765.7 million from £694.8 million last year, with service-related sales providing a boost and now accounting for 48% of revenues compared to 23% in FY20. As a result of that services demand, the company announced a recruitment drive to fill 1,000 new automotive technician roles in the next 12 months.
The company also said its Motoring Loyalty Club membership numbers were above expectations.
“The success of our Motoring Loyalty Club is exceeding our expectations, as customers continue to be attracted by a range of discounts and offers that are aimed at helping motorists across the UK with the rocketing cost of running and maintaining a car. The club is playing a key role in the rapidly growing demand that we are seeing for vehicle servicing, MOTs, maintenance and repairs,” said Graham Stapleton, Chief Executive Officer of Halfords.
Looking ahead, the company sees underlying profit before tax at the lower end of its £65 million to £75 million guidance range. However, H2 trading is said to be strong in needs-based areas, while the more discretionary areas have softened.
“This has been a period of strong strategic progress and resilient financial performance for Halfords. In such a volatile macroeconomic environment, our strategy of focusing on the kind of predictable and recurring revenue that comes from motoring services and needs-based products has never been more relevant,” added Stapleton.