How will Halfords shares react to strong gains in FY 2021 results?

The Halfords Group posted a 13.1% rise in 52-week revenue in the previous year in its preliminary results for the 2021 financial year. As Halfords transitions into a service-led business, what is the outlook for Halfords shares?

  • 2021 revenue up to £1.29bn in 2021 from £1.16 bn
  • Retail and Autocentre revenue both up year-on-year
  • Gross margin down from 51.1% to 50.8%
  • Pre-tax FY 22 profit targets of £75m+
  • Ready to trade the Halfords share price? Open an account today today

What are the headline figures from Halfords’ Preliminary Full Year 2021 results?

Since the onset of the Covid-19 pandemic, Halfords shares have risen over 535% from a baseline price of 64.90p on 30 April to its 423.40p share price today (17 June). This is largely due to the positive trading results from Halfords’ latest full year of trading.

Today, the Halfords Group published its full year 2021 prelims, citing a year of ‘very strong financial and operational progress’ for the FTSE Small Cap firm.

The group’s CEO, Graham Stapleton, confirmed the move towards a service-led approach had been ‘rapidly accelerated’ in the last 12 months. In doing so, Halfords managed to achieve a ‘record revenue performance’ in its Autocentres, which Stapleton described as a ‘strategically important area’ of the business.

Halfords’ Autocentres revenue was up from £194.1m in FY 2020 to £252.m in FY 2021. This comes despite the decline in road traffic as a consequence of the multiple nationwide Covid-19 lockdowns.

Overall, its underlying pre-tax profit for FY 2021 was £96.3m – a 72.3% rise in 52-week revenue on FY 2020.

What external factors bring uncertainty to the outlook of Halfords shares?

Although its FY 2021 prelims state that Halfords Group is ‘positive’ on its ‘prospects for FY 22’, the update mentions multiple external factors that ‘add uncertainty’ to the outlook of the Halfords share price.

First and foremost, its supply chain challenges for cycling products are ‘acute’, which is a major hurdle given that strong demand for road bikes has helped offset the decline in automotive traffic in the last 12 months.

The update adds that the ‘general economic outlook remains challenging’, questioning the appetite of consumers and their potential caution to return to normal buying behaviours. The firm anticipates consumers will demand ‘greater value from their purchases’. This is one of the reasons why the Halfords Group is investing heavily in pricing within its Retail Motoring arm, which it believes could have a short-term impact on FY 22 gross margins, whilst ‘strengthening the business in the medium and long term’.

How does the Halfords balance sheet look after a turbulent 12 months?

Halfords has ended its FY 21 with a ‘strong balance sheet’, posting net cash of £58.1m. Its EBITDA ratio, on a pre-IFRS 16 basis, stands at 1.0x and 1.5x in the short-term to underpin future activity surrounding mergers and acquisitions to scale its Retail Motoring division.

Its ‘transformation plan’ as a service-led business will need up to £60m worth of capital expenditure per annum in the medium term.

Based on the strength of its balance sheet, Halfords shareholders are set to receive an FY 21 final dividend of 5p per share, with its historic final dividend of 9p per share slated to return for FY 22.

Go long or short with the Halfords share price today

Take your position on UK shares for just a small initial deposit with CFDs.

Open an account to start trading or investing in UK shares.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.