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Halfords PLC

Halfords Group plc Challenging third quarter led to a reduction in profit expectations

Halfords Group plc (LON:HFD), the UK’s leading provider of motoring and cycling products and services, today updates the market on its trading performance for the 14-week period to 4 January 2019.



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Car Maintenance



Car Enhancement



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 Key points for the 14-week period

· Group revenue -1.7% LFL, with +1.4% growth in Autocentres offset by -2.2% LFL in Retail, reflecting the impact of mild weather and weak consumer confidence

· Retail Motoring sales -3.4% reflecting declines in weather-related and discretionary products and services, partially offset by growth in non-weather-related motoring consumables

· Retail Cycling sales were broadly flat at -0.3% LFL on a strong comparative of +8%. Growth in cycle accessories and children’s cycling was offset by a decline in the more discretionary and bigger-ticket adult bikes

· Autocentres LFL +1.4%, reflecting broad based growth in services and maintenance work. Continued good progress on operational improvements

· Group online sales, which represent 20% of total sales, grew +7.5% with over 80% of Halfords.com orders collected in store

Financial outlook

Operating costs and gross margins have been well controlled. However, reflecting the impact on revenue of the mild weather and weak consumer confidence, we now anticipate FY19 underlying profit before tax to be in the range of £58m to £62m.

At this stage, we believe that consumer confidence could remain weak into next year and therefore anticipate FY20 profit before tax to be broadly flat on the revised FY19 expectation. Evidently, however, we are in an uncertain environment and will provide an update alongside our preliminary results in May. The Group remains cash generative and has a strong balance sheet. We expect free cash flow for the full year to be up on last year and we remain confident that we will grow free cash flow over the medium term, supported by good early progress in our cost and cash efficiency programmes. This, combined with positive longer-term prospects for the Group, gives the Board confidence to maintain its dividend policy.

Graham Stapleton, Halfords Chief Executive Officer, commented:

“This has been a challenging third quarter for the business, driven by exceptionally mild weather and ongoing weak consumer confidence. Together, these factors have led us to reduce our profit expectations. Whilst this has been a difficult period, we have managed costs and margin well and our free cash flow remains strong. Halfords is a robust business and we firmly believe that the strategy we outlined in September is the right direction for the business.”