A UK retail stockbroker has questioned Halfords claim that it will see a jump in sales and profits over the mid-term. The company’s share price soared last week as figures revealed sales could grow to about £1.9 billion.
Halfords has seen its share price fall 30 percent over the last year, but is forecasting an increase in sales from £1.6bn in its 2022-23 year. It’s also predicting a rise in pre-tax profits, up from £50-60m to £90-100m.
In a statement, the company said: ”We expect to deliver this growth through a combination of our core markets recovering from the current very challenging conditions, growing market share by leveraging the unique platform we have built, our acquisition synergies maturing, and using scaled and rich customer and vehicle data to drive customer lifetime value.”
Chief executive Graham Stapleton told investors: ”Since 2018, we have doubled the size of our B2B and services business and have become the UK’s biggest motoring services provider, increasing our group sales by around 40 percent.
“From here, we see significant potential.”
Halfords is targeting a “market leading position” in the servicing of all forms of electric vehicles, including cars, vans, scooters and bikes.

But Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Halfords transformation from a retailer into a more services-focused group should provide a more reliable future revenue stream, as drivers subscribe to the group’s Motoring Loyalty Club.
“Things like car servicing or a new battery aren’t negotiable, which is why we’re happy to see about 50 per cent of sales now come from this more robust area. But after relatively weak group performance this financial year, Halfords is needing to rebuild investor confidence.
“Halfords is looking to roughly double its profits over the medium term. It’s got a plan to get there, but it certainly won’t be without challenges.
“Halfords is being held back by a lack of skilled labour in its Autocentres business. That makes it more difficult to service demand and we question if it will limit the ability to perform more lucrative (complex) work. It’s a problem that can’t be fixed overnight.”
Chiekrie points to weakening demand as another barrier to success, particularly in the consumer tyre market and more expensive, non-essential products.
Inspiration for independent garages?
Further insight from Hargreaves Lansdown could provide inspiration for independent garages, particularly those looking for growth or new initiatives.
It highlights “the shift toward more reliable, service, revenue”, such as servicing and new batteries. It also credits the company’s Motoring Loyalty Club, which has “mushroomed” to around 1.2 members, who pay nothing for basic membership, or £49 a year for the Premium package.
Premium membership includes a £10 welcome voucher, free MOT, 5 percent of motoring products and services, free next-day delivery of online orders, a 10-point car check and free fitting of wipers, bulbs or batteries (once only).
Hargreaves Lansdown also says its focus on electric vehicles “won’t be cheap”, but “the investment may just pay off”.
Finally, it says growth in its ‘Mobile Expert’ offer, the company’s mobile fitting service, has seen “impressive growth”, although margins are “very poor”. Blending a mobile offer with traditional garage services could be the answer.
Source of main story: Reuters