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Halfords expects 'severe' coronavirus impact in coming weeks

As a bike and motoring specialist, Halfords is deemed an essential supplier by the government and can keep its stores open under current restrictions.

Halfords Group PLC -
Partial store coverage is planned during the crisis

Halfords PLC (LON:HFD) has warned it expects the impact of coronavirus to be severe in the coming weeks in spite of a recent strong uptick in trading.

Sales of its Turbo Charger range have surged while cyclists and motorists have been making sure their bike or car is in good order ahead of any UK transport curbs.

Halfords is deemed an essential supplier by the government and can keep its stores open under current restrictions.

From Monday, its stores had been running as drive- thrus with staff taking products to customers waiting outside.

The retailer is working on plan to open some stores again later this week, though to what extent was not clear.

Halfords said it is aiming for partial store coverage and broker Investec added it is very uncertain how many stores would remain open.

The company’s Autocentres garages and Mobile vans are open, while online orders are still being taken for home delivery and click & collect at stores do re-open.

Halfords added that trading had been very strong in the past two weeks but following the restrictions on peoples’ movement imposed this week it is bracing for a sharp downturn.

The dividend has been suspended, saving £24mln, while the business rate holiday will save an additional £26mln.

Capital expenditure and discretionary spending have also been slashed.

“Given the latest government guidance we believe there is a high likelihood that sales will drop sharply and, if so, that the shortfall will have an impact on profitability, such that FY20 underlying profit before tax, on a 52-week and pre-IFRS16 basis, could be at the lower end of, or slightly below, the current guidance range of £50-55mln.” 

No guidance was given for the next financial year.

Graham Stapleton, chief executive, added: “Halfords has an essential role to play in keeping the country moving, providing vital support to emergency workers, fleet operations, key workers and the general population as they travel for essential supplies and, where required, attend places of work.”

Liberum added: “Decisive steps are being taken to cut cash outflows and with banking facilities, we think, at first glance, the group has liquidity of over £225mln.

“The nature of the group’s operations means that it has ‘essential’ trading status and access to government support and negotiations with landlords suggest a more positive outlook than the 63% share price decline YTD,” the broker added.

Shares jumped 28% to 77p.

 

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Quick facts: Halfords Group PLC

Price: 64.9 GBX

LSE:HFD
Market: LSE
Market Cap: £129.23 m
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