Revenues up at Halfords, but skills shortages threaten to limit growth retailer warns

Group revenues grew by more than 38 per cent at Redditch-headquartered motoring specialist Halfords reflecting strong sales in motoring and needs-based categories, but overall revenues were impacted by softer than expected cycling and tyre markets.

The latest trading update, for the company's third quarter, also revealed that services representing just over 50 per cent of Group revenue, and B2B just over 28 per cent with a strong Commercial Fleet performance growing 138 per cent year-on-year.

However the company warned that the continuing challenging labour market means that it has been unable to recruit enough skilled technicians in its autocentres business which it expectswill limit growth of higher margin sales during the important upcoming Q4 MOT peak.

https://www.businessinnovationmag.co.uk/come-out-of-retyrement-says-halfords-as-it-kick-starts-major-recruitment-drive/

It also warns that a continuing weak consumer tyre market continue is lasting longer than anticipated and expects a deeper decline in demand for more discretionary high-ticket items in retail than previously forecast.

These challenges has seen the company reducing its FY23 underlying profit before tax guidance from £60 million to £50 million.

While the cycling and consumer tyre market softened, Halford's auto centres are seeing a higher proportion of sales in lower margin categories, impacted by the current nationwide shortage of skilled labour. This has had an effect on overall profitability.

The Group said it continues to deliver strong revenue growth against prior year and three-year comparisons,

Graham Stapleton, Chief Executive Officer, said: “We have seen strong revenue growth in what are exceptionally challenging circumstances, and we have continued to grow our market share whilst 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 Loyalty 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.”