Halfords Group PLC (LSE:HFD) tightened guidance to the lower end of previous expectations as it warned of a softening in discretionary big ticket products.
The car and cycle retail and repair specialist now expects financial 2024 underlying pre-tax will fall within a narrower range of £48-£53 million, compared to the £48-£58 million before.
The firm said B2B businesses and needs-based categories are continuing to show very strong growth but trading patterns have been volatile across the first half of the year.
In the 26 weeks to 29 September 2023, Halfords reported revenue growth of 13.9% to £873.5 million with Iike-for-like sales growth of 8.3% achieved despite a “challenging macro environment”.
Pre-tax profit advanced 3.3% to £19.3 million from £18.7 million with underlying EPS up 13.4% to 7.6p.
Halfords continues to expect financial 2024 profit delivery to be second-half weighted as inflationary headwinds annualise, coupled with the delivery of the balance of targeted cost and efficiency savings of £30 million.
“It does, however, remain challenging to predict whether the recent trends in discretionary categories will continue,” the firm said.
Looking beyond 2024, assuming markets recover in line with projections, Halfords remains confident in its mid-term target of £90-£110 million underlying pre-tax profit.
In the first half of the year, the company reported market share gains in all categories, ahead or in line with expectations.
Needs-based categories, such as retail motoring and motoring services, showed strong growth and were in line with expectations but discretionary markets such as Cycling, were “challenging and below expectations” due to the tough consumer environment.
Autocentres delivered strong sales growth and profitability with total sales up 33.9% and EBIT of £10.9 million, up £14.1 million.