Halfords has warned that sales will “drop sharply” in light of the coronavirus outbreak, with a forecasted sales decline of 25%.
After modelling a range of disruption scenarios that assume “significant sales declines” between April and June, it predicts its next full-year results will see a loss of £300m in sales.
In its latest update, Halfords announced that it is “confident that the post-pandemic future of the business remains strong”, though trading in the near term is likely to be “severely impacted”.
It believes that its full-year underlying profit before tax will likely be below the current guidance range of £50-55m. It also expects a material reduction in volumes “despite an improvement in recent sales performance”.
In an effort to preserve cash, the group added it will now suspend dividends, resulting in a cash saving of approximately £24m in its next full-year results.
Meanwhile, the group said it has been designated by the government as a “provider of essential services”, and therefore has legal flexibility to remain open amid the current crisis.
The motor and cycling service provider said that it has an “essential role to play in keeping the UK moving”, and noted that several key workers, including the Ministry of Defence and British Transport Police rely on the group to “keep their motor fleet running”.
Its autocentres, garages and mobile vans will continue to remain open, and the group is now “working through a plan” to provide partial store coverage across its retail sector from later this week.
It will continue to take online orders, offering either a home delivery service or Click and Collect once branches are reopened.
Graham Stapleton, CEO of Halfords, said: “In such difficult times the health and safety of our colleagues and customers remains our top priority and we continue to take all appropriate action in line with government advice.
“Halfords has an essential role to play in keeping the country moving, providing vital support to emergency workers, fleet operations, key workers and the general population as they travel for essential supplies and, where required, attend places of work.”
He added: “While significant uncertainty exists on the impact of COVID-19, we are taking immediate and significant measures to contain our costs and protect our financial position. We have a strong balance sheet, with significant liquidity headroom and low levels of financial debt.
“This is an unprecedented challenge for all of us, but I am confident that the actions we are taking to successfully navigate the current situation will put the business in a position of strength, enabling us, over the medium term, to refocus on our strategic transformation.”