28
February
2024
Halfords Group
plc
Trading
Update: Financial Year 2024
Halfords Group plc
(“Halfords” or the “Group”), the UK’s leading provider of Motoring
and Cycling services and products, today issues the following
trading update.
At our Q3 trading update
on 25 January 2024 we indicated that we expected Underlying Profit
Before Tax1
(“PBT”) for the 52-week
period ending 29 March 2024 to be between £48m and £53m, assuming
markets did not weaken further in Q4. Since that update, we have
seen a further material weakening in three of our four core markets
(i.e. Cycling, Retail Motoring and Consumer Tyres), resulting in a
significant drop in like-for-like (“LFL”) revenue growth in our
Retail business.
As a result, we now
expect PBT to fall in the range of £35-40m. This reduction in
profit expectations is driven by two key factors:
-
Both the Cycling and Retail Motoring markets have been
impacted by a combination of continued weak customer confidence and
unusually mild and very wet weather, which affected footfall into
stores and sales of categories such as winter and car cleaning
products. Volume in the Retail
Motoring market fell year-on-year by 5.1% pts in January (vs an
increase year-on -year of +0.2% in Q3); volume in the Cycling
market fell year-on-year by 8.0% pts in January (vs a decline of
5.1% pts in Q3); and volume in the Consumer Tyres market fell by
4.3% pts in January (vs a decline of 2.6% pts in Q3).
-
The Cycling market has become more challenging and
competitive as it continues to consolidate. Promotional
participation has increased, and more customers are purchasing on
credit, leading to weaker gross margins than previously
anticipated.
We continued to deliver
good growth in our resilient and strategically important
Autocentres business. Although the Consumer Tyres market worsened
in January, we saw a strengthening Service, Maintenace and Repair
(“SMR”) market and we continue to see good customer demand in this
area.
Our FY24 PBT forecast
assumes the same challenging market conditions continue for the
rest of Q4, including through our peak Easter cycling period in
March. We have continued to take decisive action on cost, but in
the short period between now and the end of the financial year this
will not be sufficient to offset the significant market
deterioration we have seen.
Looking ahead to FY25, we
remain cautious on market recovery in the short-term, and the
current significant volatility in market conditions means that
forecasting accurately is challenging. Notwithstanding this, we
anticipate that underlying PBT in FY25 will be broadly in line with
that forecast in FY24 assuming that: 1) There is marginal
year-on-year growth in our core markets, with trading conditions
seen in Q4 proving anomalous; and 2) The Cycling market normalises
and margin pressure dissipates through the year. FY25 PBT will be
supported by cost savings that more than offset net inflationary
headwinds.
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.
-
Underlying profit before tax is
stated before non-underlying items. Non-underlying items for FY24
will include costs related to the closure of our existing tyre
supply operation, as detailed in our recent Q3 Trading Update. We
will review the carrying value of our assets in line with our
year-end timetable and report the results of this as part of our
Preliminary Results Announcement. It is likely that the results of
the existing tyre supply operation will be disclosed as
Discontinued Operations in the FY24 accounts – our revised guidance
for PBT includes the results of the tyre supply operation i.e. it
is based on ‘All Operations’.
Enquiries:-
Investors &
Analysts (Halfords)
Jo Hartley, Chief
Financial Officer
Neil Ferris, Director of
IR and ESG
+44 (0)
7483 457 415
Neil.Ferris@halfords.co.uk
Media
(Powerscourt) +44 (0) 20 7250
1446
Rob
Greening
halfords@powerscourt-group.com
Nick Hayns
Elizabeth
Kittle
Notes
to Editors
www.halfords.com
www.tredz.co.uk
www.halfordscompany.com
Halfords is the UK's
leading provider of motoring and cycling services and products.
Customers shop at 386 Halfords stores, 3 Performance Cycling stores
(trading as Tredz and Giant), 645 garages (trading as Halfords
Autocentres, McConechy’s, Universal, National Tyres and Lodge
Tyres) and have access to 266 mobile service vans (trading as
Halfords Mobile Expert, Tyres on the Drive and National) and 554
Commercial vans. Customers can also shop at halfords.com and
tredz.co.uk for pick up at their local store or direct home
delivery, as well as booking garage services online at
halfords.com.
Cautionary
statement
This report contains
certain forward-looking statements with respect to the financial
condition, results of operations, and businesses of Halfords Group
plc. These statements and forecasts involve risk, uncertainty and
assumptions because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements. These forward-looking statements are made only as at
the date of this announcement. Nothing in this announcement should
be construed as a profit forecast. Except as required by law,
Halfords Group plc has no obligation to update the forward-looking
statements or to correct any inaccuracies therein.