- Halfords expects to make £32m-£37m in underlying pre-tax profits this year
- The firm saw positive like-for-like sales growth in its retail and autocentres arms
Halfords shares soared after the motor and cycling retailer lifted profit guidance in response to a rebound in trade over Christmas and lower costs.
The Redditch-based firm observed positive like-for-like turnover growth in both its retail and autocentres businesses over the third quarter, with Halfords citing a boost from cold weather.
Halfords also told investors on Tuesday it had seen weaker than expected FX headwind and freight costs, and the group is on track to ‘exceed’ its £30million annual savings target.
Britain’s largest cycling and motor services retailer expects to make between £32million and £37million in underlying pre-tax profits this financial year, compared to analyst consensus of £28.3million.
Halfords Group shares jumped by more than 19 per cent on Tuesday morning before retreating to a 15.1 per cent gain at 145p by 9am, making them the FTSE All-Share Index’s biggest riser.
Yet the firm’s shares are still around 17 per cent down on 12 months ago, having taken a dive after a profit warning last February.
A rollout of its Fusion Motoring Services strategy, which seeks closer relationships between retail and autocentre divisions within a town, led to services, maintenance and repair sales in consumer garages expanding by 10.3 per cent.
Meanwhile, comparable retail revenues grew by 13.1 per cent in December due partially to greater promotional activity and festive gifting of cycling-related goods.
Halfords enjoyed a 5.5 per cent bump in motoring product sales in January, which it credited to cold weather conditions when drivers often buy items like de-icers and new batteries.
Forecast: Halfords expects to make between £32million and £37million in underlying pre-tax profits this financial year
Halfords declared in November that tax and wage hikes announced in the Budget would add around £23million in direct labour costs during the 2026 fiscal year.
From April, employers’ National Insurance rates will increase from 13.8 per cent on annual salaries exceeding £9,100 to 15 per cent on wages higher than £5,000. In addition, the National Living Wage will go up by 6.7 per cent to £12.21 per hour.
Many prominent British retailers have said the upcoming changes will force them to either hike prices, make redundancies or close stores.
Sainsbury’s announced last Thursday that it would cut 3,000 jobs, including a fifth of its senior management, while fellow supermarket chain Morrisons said it would axe over 200 positions.
‘Despite the recent positive performance, there remains considerable uncertainty regarding the outlook for the UK consumer in light of measures introduced by the Autumn Budget,’ said Halfords.
It added that their ‘effects on the demand environment and health of the broader economy are harder to predict.’
But the firm insisted that costs were being ‘well-managed’ and were on track to exceed the £30million annual target, with freight costs now expected to be below the previously guided range of £4million to £7million.
‘There are still some headwinds, but management has the business correctly configured to take advantage of better trading conditions,’ remarked Peel Hunt analysts.
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