Halfords issues profit warning as labour shortage bites

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Halfords warned its annual profits could drop from between £5m and £25m despite posting strong revenue growth over Christmas.

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Halfords expects full-year underlying profit before tax to be between £50m and £60m

Halfords posted 38.3% group revenue growth over the third quarter but now expects its full-year underlying profit before tax to be between £50m and £60m, compared with the £65m to £75m it had previously forecast.

The motoring and cycling retailer said it had been unable to recruit enough technicians in its autocentres, limiting its peak MOT period in the fourth quarter, and that demand for tyres and high-value products had weakened.

Halfords gained share across all cycling, motoring and tyre markets but said macroeconomic headwinds had continued to make an impact, with the majority of sales in its centres being in lower-margin and “needs-based” categories, impacting its profitability.

Halfords chief executive Graham Stapleton said: “We have seen strong revenue growth in what are exceptionally challenging circumstances and we have continued to grow our market share while also tightly managing our costs, inventories and cashflows.

“Consumer demand for our services and needs-based categories, which now account for the majority of our revenue, continues to grow, and our Motoring Club is exceeding expectations as customers recognise the value of its unrivalled discounts and offers.

“With unprecedented demand in our motoring services business, we are particularly impacted by the nationwide skills shortage, with recruitment proving to be extremely challenging in the current labour market.

“We are continuing to take a range of actions in order to fill 1,000 new automotive technician roles, which include our new Later Life Apprenticeship programme, as well as a focus on attracting more women and young people from disadvantaged backgrounds into automotive apprenticeships.

“We are confident that we can offer unrivalled career progression for automotive technicians, and that this will allow us to attract and retain talented individuals, thereby enabling us to better service the demand through FY24.”