- Stapleton exits after mixed stint
- Henry Birch hops into the hot seat
- Strong finish to year to March 2025
Shares in Halfords (HFD) rallied 10% to 136.5p in early dealings after the car parts-to-bicycles seller delivered its second profit upgrade in four months following a ‘strong finish’ to its financial year.
But the news that really fueled the share price jump was chief executive Graham Stapleton’s exit after more than seven years in the hot seat.
Judging by the share price reaction, investors are hopeful his replacement Henry Birch, the former boss of Rank (RNK) and The Very Group, can accelerate earnings progress at the camping equipment-to-car batteries purveyor.
DRIVING CHANGE
During his stint in charge, Stapleton drove Halfords’ strategic change from a cycling and motoring retailer to an omni-channel retail and services business, growing the group’s annual revenue from £1.1 billion to £1.7 billion.
AJ Bell investment director Russ Mould said: ‘A 61% fall in the share price over Stapleton’s tenure does not make for the best report card but the disruption associated with Covid and the inflationary period coming out of the pandemic haven’t helped. In time the strategic progress in shifting the focus away from a largely cyclical retail operation may see him get some credit.’
Mould also pointed out that Birch’s previous role at online retailer The Very Group ‘may see him press the accelerator on Halfords’ digital operation’.
STEPPING ON THE GAS
Following a strong finish to the year to 28 March 2025, and having exceeded its £30 million cost saving target, operationally-geared Halfords now expects underlying pre-tax profit to be ‘around the upper end’ of the upgraded £32 million to £37 million guidance given in January.
Halfords witnessed improving trends across all parts of the business in the second half, with gross margin gains accelerating and retail like-for-like sales turning positive, picking up in both motoring and cycling to deliver 1.7% full-year growth.
Despite a demanding prior-year comparative of 10.7%, full-year like-for-like sales in the Autocentres arm grew 3.7%, with strong growth in strategically important Services, Maintenance and Repair work more than compensating for softness in the consumer tyre market.
UNCERTAIN OUTLOOK
Halfords, which finished the year in a net cash position, expects to be able to mitigate the entirety of the direct inflationary impact of the Autumn Budget in the year to March 2026, although the company cautioned retail sales remained volatile and the consumer outlook was uncertain.
Management stated the retailer has no direct exposure to new US tariffs, as the company neither imports from nor exports to the US, although potential indirect impacts on the supply chain and consumer spending were still being assessed.
‘Reflecting new guidance, we upgrade our pre-tax profit forecasts this year by circa 14%,’ said broker Panmure Liberum, which has a Hold rating on the stock. ‘While the improvement in earnings momentum is encouraging, we would like to see further evidence of sustained progress to believe that Halfords is entering a new upgrade cycle.’
AJ Bell’s Mould observed Halfords is yielding particularly strong benefits from its ‘Fusion’ strategy - creating a more joined-up approach between its retail outlets and its car repair Autocentres.
‘Given that keeping your car in working order is not an optional extra but a necessity for most people, these link ups could make revenues across the business more resilient,’ he explained.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
