REG-Halfords Group PLC Halfords Group PLC: Trading Update: Financial Year 2024

HalfordsAnnouncement

28/02/2024 07:15

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   Halfords Group PLC (HFD)
   Halfords Group PLC: Trading Update: Financial Year 2024

   28-Feb-2024 / 07:00 GMT/BST

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   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:

    1. 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).

    

    2. 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.

    

    1. 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            1 halfords@powerscourt-group.com

   Nick Hayns

   Elizabeth Kittle

    

   Notes to Editors

   www.halfords.com                                    2 www.tredz.co.uk        
    3 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.

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   Dissemination of a Regulatory Announcement that contains inside information
   in accordance with the Market Abuse Regulation (MAR), transmitted by EQS
   Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          GB00B012TP20
   Category Code: TST
   TIDM:          HFD
   LEI Code:      54930086FKBWWJIOBI79
   Sequence No.:  306375
   EQS News ID:   1846643


    
   End of Announcement EQS News Service

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References

   Visible links
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