Halfords profits set to decline as sales stunted by shortage of mechanics
The bike and car parts seller warned over its profits earlier in the year amid a shortage of skilled workers.
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Your support makes all the difference.Investors in Halfords will be hoping the retailer has made progress in repairing holes in its workforce as it is set to unveil its full-year financial results.
The bike and car parts seller warned over its profits earlier in the year amid a shortage of mechanics.
The firm, which also services cars and bikes and offers MOTs, said it was struggling to recruit enough skilled technicians to meet higher levels of demand.
Chief executive Graham Stapleton said the firm was having to look at its staff pay and flexible working policies because “people want to work less, and more flexibly”.
He also said it would focus in the short term on recruiting skilled workers from rival motor service centres.
It comes amid a push to become a services-led business, with its autocentres business now making up nearly half of sales across the group following “unprecedented” demand.
Halfords is set to make a profit of almost £54 million for the latest full year, according to a consensus of analysts.
It compares with a profit of nearly £100 million last year, and marks a downgrade from previous market guidance, which predicted its pre-tax profit would sit somewhere between £65 million and £75 million.
The profit warning sent Halford’s share price tumbling by more than a fifth.
It recovered, but shares have declined by about 7% so far this year.
The London-listed business is also expected to report sales of around £1.6 billion for the full year.
Looking further ahead, Halfords predicted its pre-tax profit will swell to more than £100 million as the challenging trading conditions improve.
Investors will be zoning in on the shorter-term outlook, particularly for wages and other cost inflation, as well as checking how demand is holding up
The retailer also flagged a slump in sales of higher-priced items in its retail business, as tighter budgets have led people to tighten their belts.
Some consumers are deciding to delay buying bikes because of weaker confidence, which is impacting the business, Halfords revealed.
Furthermore, it has been knocked by a “massively declining” consumer tyre market, but said it may start to recover in the first half of the new financial year.
Shareholders will be hoping to receive an update on consumer demand and the strength of the tyre market when it reveals its financial results on Thursday.
Derren Nathan, head of equity research for Hargreaves Lansdown, said: “The company’s recent update focused on the medium-term outlook over which the board expects to grow pre-tax profits towards £100 million.
“Forecasts don’t suggest any progress towards this target in the current financial year. So, investors will be zoning in on the shorter-term outlook, particularly for wages and other cost inflation, as well as checking how demand is holding up.”