Halfords still expects to achieve full year pre-tax profit of over £75m
Halfords has added its name to a list of companies to report a dip in sales due to supply chain issues, suggesting the issue could persist for some time.
The company confirmed its like-for-like sales fell by nearly 23% during the 20 weeks to 20 August compared to the same period a year before.
Halfords said that while bikes had seen strong demand as the pandemic commenced, issues around distribution caused a reversal in fortunes towards the end of the trading period.
Issues include factoring production constraints, inflation of raw materials and freight disruption.
The Halfords share price is down by 3.76% on Wednesday following the company’s update.
Halfords still expects to achieve full year pre-tax profit of over £75m.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, commented on the news: “Covid related absences and other recruitment challenges are slowing sales growth in Halfords’ important Autocentre business. The group relies on an army of technicians in its garages and mobile vans, and the dent in the workforce has held performance back. That said, progress has still been remarkable, with the group revving up their market share in the first few months of the financial year.”
The core motoring business is also having a pleasant ride, largely thanks to the huge increases in staycations brought on by Covid.
Sales of the basics like bulbs and blades, as well as travel accessories, have fared particularly well, as the UK geared up to hit the motorways over the summer.
“Halfords’ full year profit ambitions remain on track, but there are some things to consider. Cycling is a real growth opportunity, but the group’s being held back by supply chain problems. Not being able to offer the right stock, or enough of it, is inevitably putting a lid on progress in the division. These are unlikely to be resolved soon. The other thing to keep in mind is that staycations are likely going to become less popular as and when the world gets back to normal. What this will mean for sales in the next summer season is yet to be seen.”