Halfords narrows full-year profit range

(Sharecast News) - Halfords said on Wednesday that it was narrowing its guidance range for annual profit as it highlighted a softening in demand for its big-ticket discretionary categories.

In its results for the 26 weeks to 29 September, the company said pre-tax profit rose 3.3% to £19.3m, with underlying pre-tax profit up 15.8% at £21.3m. Meanwhile, revenue was 13.9% higher at £873.5m, with like-for-like sales growth of 8.3%.

Halfords said its performance varied across underlying markets. Needs-based categories, such as retail motoring and motoring services, saw strong growth, in line with expectations. However, trading in discretionary markets such as cycling was challenging and below expectations due to the "well documented consumer environment".

While the B2B businesses and needs-based categories continue to show very strong growth, Halfords said trading patterns have been volatile across the first half of the year. In the last couple of months in particular, it has seen some market softening in discretionary big-ticket categories, which has been reflected in slower LFL sales growth.

"We continue to expect FY24 profit delivery to be second half weighted as inflationary headwinds annualise, coupled with the delivery of the balance of FY24 targeted cost and efficiency savings of £30m," it said. "It does, however, remain challenging to predict whether the recent trends in discretionary categories will continue."

As a result, the company now expects FY24 underlying pre-tax profit of between £48m and £53m, down from previous guidance of £48m to £58m.

Chief executive Graham Stapleton said: "Despite the challenging and volatile trading environment and slower than expected recovery in some of our markets, we have made a good start to the year, with substantial sales and profit growth, and increased market share across the business. At the same time, we supported our customers through the ongoing cost of living crisis by delivering great value - when they need it most.

"In the face of continuing economic uncertainty, we remain fully focused on optimising every element of the business, and I'm particularly pleased with the very strong performance of Autocentres, where we are delivering significantly improved returns. In light of this, we are accelerating capital investment in the garage services operating model and customer experience in ten towns in the balance of this financial year."