Halfords warns on profit after wet weather impacts sales
Halfords has warned on profit after wet weather led to softer trading in three of its core markets.
In its third quarter trading update on 25 January, the retailer said it expected its underlying pre-tax profit in the year to 29 March to come in at between £48 million and £53 million, assuming there was no further weakening in its markets in its fourth quarter.
However, today Halfords said it has seen softer trading in its cycling, retail motoring and consumer tyres categories, which has resulted in a “significant” decline in like-for-like revenue growth in its retail business.
As a result, it now expects annual pre-tax profit to fall in the range of £35 million to £40 million.
Halfords said both its cycling and retail motoring markets have been impacted by weak customer confidence and unusually mild and very wet weather in the last month. Sales have also been affected by a “more challenging and competitive” cycling market.
Volume in the retail motoring and cycling markets fell by 5.1% and 8% respectively in January year-on-year.
Furthermore, more Halfords customers are purchasing on credit which has resulted in weaker gross margins than previously anticipated.
Looking ahead to the new financial year, Halfords said it remains cautious on market recovery in the short-term, but anticipates that underlying pre-tax in FY25 will be broadly in line with the current year if there is marginal year-on-year growth in its core markets and less pressure on margins.
It added: “Whilst we have reduced our profit guidance as a result of very challenging and exceptional short-term market conditions, we remain confident in our strategy and longer-term growth prospects. When our core markets recover, the platform we have built leaves us exceptionally well-placed to succeed.”
