Halfords shares rev up as retailer pledges to keep ‘UK moving’
Car parts and bicycles retailer Halfords has seen shares soar as it vowed to help keep the “UK moving” with ongoing garage and mobile vans services and plans to reopen some of its stores.
Shares surged more than 30%, having risen as much as 63% at one stage, as it said sales had been “very strong” in the past couple of weeks and it is working on plans for a partial store opening programme.
The group has been designated by the Government as a provider of essential services, which can remain open during the lockdown.
But Halfords warned that it is nevertheless preparing for a sharp drop in sales as a result of the wider UK lockdown measures, which could see full-year profits to the end of March come in at the lower end or even slightly below City forecasts.
The chain is also pencilling in a potential £300 million sales hit – a 25% fall – over 2020-21.
Halfords has kept its Autocentres garages and mobile vans open and, while retail outlets have closed since the lockdown was announced on Monday evening, the company said it is now looking to “provide partial store coverage” from later this week.
The group said: “As the UK’s largest independent provider of motoring and cycling services, we have an essential role to play in keeping the UK moving.”
It added: “Many key workers rely on us to keep their motor fleet running, including the Ministry of Defence, the British Transport Police and several large UK utility companies.”
But the firm stressed it is “seeking to strike a balance between providing essential motoring and cycling services to the UK public alongside guaranteeing the personal safety of our customers and colleagues”.
It has continued to take orders online at Halfords.com and Tredz.co.uk, offering either home delivery or click and collect once branches are reopened.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said Halfords will face an “uphill” struggle, but will at least have some sales still coming in.
She said: “The group is responsible for maintaining some very important vehicle fleets, including the Ministry of Defence.
“That means we can expect a certain stream of revenue to keep flowing through the difficulties and gives the group an edge over peers who’ve been forced to shut down completely.
“What will be important is making sure the group gets the balance right between providing enough of a stripped-back, essential service and not firing on too many cylinders while customer traffic is a lot slower than usual.”
Halfords last week announced plans to close its Cycle Republic chain of stores, putting 226 jobs at risk, which was unrelated to the coronavirus.
The retailer said it will shut all 22 outlets and its performance centre site in Evesham, Worcestershire, as it looks to focus on its online cycling business, Tredz.
It said it expects the closures, which are due to complete in the first half of the next financial year, will cost the firm between £25 million and £35 million.