28th Jan 2025 11:37
(Alliance News) - Halfords Group PLC on Tuesday announced an upgraded full-year profit forecast based on current trading and its "continued strategic progress".
The stock was up 19% at 150.20 pence in London late on Tuesday morning.
The Redditch, England-headquartered motoring and cycling retailer experienced "positive" like for like sales growth in Retail and Autocentres during the third quarter, compared with flat growth in its first half year ended September 27.
The Retail division "traded well", with purchases in Cycling during the Christmas period contributing to 13% LFL sales growth in December.
Autocentres likewise had a "strong performance in the more profitable and strategically important Services, Maintenance & Repair [SMR] market" with 10% LFL sales growth in consumer garages. Halfords said this was supported by its Fusion Motoring Services rollout and offset "continued weakness in the consumer tyres market".
"Current trading has benefitted from the colder weather in more recent weeks with Motoring Product delivering LFL sales growth in January of 5.5%," Halfords added.
For the whole of financial 2025, which ends in late March, Halfords now expects between GBP32 million and GBP37 million in underlying pretax profit. Previously, in its half-year results, it said it remained "comfortable with consensus estimates".
It attributed the profit forecast to "an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures" in recent months.
Halfords also expects the hedged FX rate in cost of goods sold to be "better than previously anticipated", with the "Freight headwind" below previous guidance of between GBP4 million and GBP7 million.
"Costs continue to be well-managed and on-track to exceed the GBP30 [million] full-year target previously indicated," it added.
On the other hand, the company said "considerable uncertainty" remains in light of the government's Autumn budget measures which will take effect in April and be in force throughout financial 2026.
"While the impact of changes to the minimum wage and national insurance contributions are relatively easy to quantify, adding [around GBP23 million] to our direct labour costs in FY26 alone as announced in November, their effects on the demand environment and health of the broader economy are harder to predict," Halfords said. "We also continue to expect to see inflation passed through on managed services."
The company said it continues to work on "possible mitigations" for these additional costs.
By Emma Curzon, Alliance News reporter
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