Halfords Group PLC (LSE:HFD), the car parts and bikes seller, saw its shares slump in early deals after it gave decidedly shaky profits guidance.
The retailer said it expects underlying profit before tax in the year to the end of March 2023 will be within the range of £65m to £75m but acknowledged the uncertainty that this year is likely to bring.
The consensus profit before tax forecast for the current year is £86.5mln.
The group claimed it put in a “strong performance” in the 52 weeks to 1 April 2022 (FY22), with revenue growth of 19.9% from the pre-pandemic FY20 and 6% growth from FY21.
Revenue clocked in at £1.37bn, up from £1.29bn the year before, with the retail business contributing £1.00bn (FY21: £1.04bn) and the Autocentres arm chipping in with £368.0mln, up from £252.5mln the year before.
Underlying earnings (EBITDA) slipped to £207.1mln from £233.0mln the year before while underlying profit before tax declined to £89.8mln from £99.5mln. Reported profit before tax jumped to £96.6mln from £64.5mln.
“The strength and resilience of this performance is a great illustration of Halfords’ transformation over the past two years,” claimed Graham Stapleton, the chief executive officer of Halfords.
“Our strategic shift towards motoring services has delivered higher, more predictable and more sustainable returns, and our acquisitions of both National and Iverson Tyres during the year mean that we are now the UK’s largest motoring service provider. Motoring now represents over 70% of Halfords’ total revenue, and the fact that our products and services in this category tend to be needs-based rather than discretionary will help us to navigate our way through the well-documented macroeconomic uncertainty that we are currently seeing,” he added.
“While rising inflation and declining consumer confidence will naturally present short-term challenges for any customer-facing business like ours, we remain confident in Halfords’ long-term growth prospects due to our service-led strategy and the enduring strength of our brand, people, products and services,” Stapleton concluded.
Shares in Halfords slumped 18% to 162.9p on the results.
Liberum Capital Markets said the full-year results were solid but the guidance implies a cut of around 15% to profit before tax forecasts.
“Consensus sat in a fairly broad range ahead of today, but we expect a c.15% cut on average. Liberum view: The market will clearly be focused on management’s outlook so the cut to guidance will likely weigh on the shares, despite the already lowly valuation,” the broker said.