Retailer’s profit warning put skids under new strategy
Profits are expected to fall by as much as 20% at Halfords after the retailer endured a difficult quarter’s trading.
Mild weather and weak consumer confidence were blamed for its poor performance that saw group revenues fall by 2%.
It is now forecasting underlying profits for the financial year to March 2019 to be between £58m-£62m, which would be the fourth consecutive year of falling profits for the Redditch-based group.
Halfords underlying pre-tax profit, 2015-2019 (£m):
Despite the drop this year, the following year’s profits are being forecast to be “broadly flat” with consumer confidence expected to remain weak.
Halfords chief executive Graham Stapleton sought to reassure investors in the FTSE 250 company about its longer term prospects.
“This has been a challenging third quarter for the business, driven by exceptionally mild weather and ongoing weak consumer confidence,” he said.
“Together, these factors have led us to reduce our profit expectations. Whilst this has been a difficult period, we have managed costs and margin well and our free cash flow remains strong.
“Halfords is a robust business and we firmly believe that the strategy we outlined in September is the right direction for the business.”
That strategy sought to improve the shopping experience, improve its offer of services and increase cross-selling.