Halfords had sales dip over Christmas, but profits are still on target

25 January 2024 , 12:32

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Halfords has reported weaker-than-expected sales due to mild weather and customers cutting back (Image: PA Media)

Halfords has reported weaker-than-expected sales due to mild weather and customers cutting back before Christmas.

The company said retail motoring sales dropped 15.3% in December, blaming the weather and "customers balancing difficult spending decisions in the lead-up to Christmas". This was a big change from the growth of 10.2% seen in October and November.

Overall retail sales were flat for the 13 weeks leading up to December 29, with cycling and consumer tyres markets performing worse than expected. Halfords says it's now focusing on cost savings due to the tough consumer environment.

However, it still expects full-year profits to be between £48 million and £53 million, as long as markets don't get worse in its final quarter. The group said. "We remain cautious on market recovery in the short term and we are not currently planning for a material improvement in our key markets in 2024-25."

CEO Graham Stapleton said it is "a very challenging time for our customers". He added: "We are still seeing drivers delay essential maintenance and there is a worrying increase in potentially unsafe vehicles on the road," he pointed out.

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"Although, he uplifted spirits by stating that: "Trading in the fourth quarter has begun strongly and we remain focused on everything that we can control, with a number of initiatives under way to achieve further efficiencies within the business." On savings, it was revealed that the group has planned to save over £35 million in the current fiscal year, a significant rise from the previous target of £30 million.

The most recent update indicated an impressive bounce-back for the autocentres chain, with sales rising by 5.1% on a like-for-like basis. However, Halfords revealed some concerns about the consumer tyres market, which seemed as though budget-conscious motorists have been cutting back on spending.

It said there's "an upward trend year on year in the number of cars with tyres classed as unsafe with a tread depth below the legal limit of 1.6mm". Finally, bike sales showed a small decline of 1.2% in the third quarter. Nonetheless, Halfords noted this as an improvement, suggesting a slight recovery in this area.

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Lawrence Matheson