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Halfords calms slowdown fears as motoring group’s revenues speed up

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Halfords calms investor slowdown fears as revenues speed up – but sales are still set to return under pressure

  • Halfords shares have had a torrid yr amid broker downgrades
  • Brokers fear the firm will struggle from the fee of of living crisis
  • It saw revenue growth of 9.2% within the 20 weeks to 19 August 

Halfords Group shares rallied today after the motoring group posted near-double digit revenue growth for 20 weeks to 19 August.

Total revenues were up 9.2 per cent versus its last financial yr and Halfords told investors it’s on the right track to attain full-year underlying profit before tax of £65million to £75million, with second half profit exceeding the primary.

Halford’s shares were up 14.7 per cent to 153p approaching midday, providing a rare respite to the firm’s shareholders who’ve seen the worth fall by around 57 per cent because the starting of the yr.

Brokers think Halford’s will suffer from a fall in discretionary spending as the fee of living crisis bites 

The group, which has 400 UK stores, have primarily been under pressure consequently of concerns about its exposure to the fee of living crisis and broker downgrades.

Panmure Gordon said last month that the cycling and motoring group was ‘naturally at some risk’, lowering its stock rating to ‘hold’ from ‘buy’ and slashing its goal price in half to 150p.

Panmure warned that Halford’s retail division – including the sale of bikes, scooters and accessories similar to helmets, lights and locks – was now ‘exposed’ to the economic downturn.

It said: ‘Halfords is of course at some risk coming into the period of significantly increased pressure on consumer spending in 2022.

‘We support much of the present strategy but we feel focus mainly on the AutoCentres business has left the retail division somewhat exposed in the present environment.’

Nevertheless, in Wednesday’s update Halfords highlighted the actual fact it has shifted its business towards motoring, which now accounts for around 70 per cent of the group’s revenues and includes MOTs, servicing and breakdown cover.

This, it argued, should shield it from some elements of the fee of living crisis.

Boss Graham Stapleton said: ‘The undeniable fact that this area of spend tends to be more needs-based slightly than discretionary is resulting in a really resilient group performance, despite the broader macroeconomic uncertainty.’

The firm also told investors it had made ‘good progress’ on its cost saving and inflation mitigation targets, while stock levels are according to expectations.

Stapleton said: ‘We’re working extremely hard to assist our customers with the cost-of-living crisis and have dropped prices across nearly 2,000 motoring essentials, ensuring that products remain accessible and inexpensive for all.

‘Our motoring loyalty club can also be proving to be extremely popular and has already attracted over half one million members since its launch in March, with advantages including MOT discounts and a free 10-point automotive health-check, putting almost £14millon of savings directly back into members’ pockets.’

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