Halfords shares soar after strong profit expectations revealed

Halfords saw its shares rise 13% to 140.34p this morning after announcing a second profit upgrade in four months and the news that CEO Graham Stapleton will step down.

The departure of Stapleton, who oversaw Halfords’ transformation from a traditional cycling and motoring retailer to an omnichannel retail and services business, has been followed by the appointment of Henry Birch as the new CEO.

Investors are “lapping” the changes up, with shares spiking after Halfords revealed a stronger-than-expected finish to its financial year.

Birch, the former chief of The Very Group and Rank Group, is expected to accelerate the company’s digital growth and strategic evolution.

AJ Bell investment director, Russ Mould, said: “Changes are underway at motoring and cycling services and products specialist Halfords and the market is lapping them up.

“A 61% fall in the share price over Stapleton’s tenure does not make for the best report card, but the disruption associated with Covid and inflationary pressures haven’t helped. In time, the strategic progress in shifting away from a cyclical retail operation may see Stapleton get some credit.”

The company reported growth across its Autocentres and retail operations, particularly in its Services, Maintenance, and Repair sectors.

These gains helped offset weakness in the consumer tyre market and overall inflationary pressures.

After exceeding its £30m cost-saving target, the company now expects underlying pre-tax profit to fall at the higher end of its revised £32m to £37m forecast.

A key element in Halfords’ future success is its ‘Fusion’ strategy, which integrates its retail outlets with its car repair Autocentres.

Mould continued: “Given that keeping your car in working order is a necessity for most people, these link-ups could make revenues across the business more resilient. Birch’s previous role at online retailer The Very Group may see him press the accelerator on Halfords’ digital operation.”