Halfords Group PLC (LSE:HFD) has slashed its profit guidance for the current year after seeing a "further material weakening" in three of its four core markets- cycling, retail motoring and consumer tyres.
As a result, the retail business has seen a significant drop in like-for-like revenue growth and profits this year now are expected to be between £35-40 million rather than £48-53 million.
In cycling and retail motoring, markets are being hit by continued weak customer confidence and unusually mild and very wet weather, Halfords said.
This has affected footfall into stores and sales of categories such as winter and car cleaning products.
In January, volumes in the retail motoring market fell year-on-year by 5.1% pts, in cycling by 8% and by 4.3% in consumer tyres.
Cycling has also become more challenging and competitive overall, according to Halfords, as promotions have increased and more customers are purchasing on credit, leading to weaker gross margins.
Service, maintenance and repair is the only division that saw an improvement.
Halfords has based its new profit forecast on the assumption that trading conditions do not improve by the end of this year, adding it is also cautious about conditions leading into 2025.
At present, Halfords is guiding that results will be similar to 2024, but this depends on the cycling market normalising and core markets starting to grow again.
In the meantime, more cost savings are being implemented to mitigate the current conditions.