Motoring and cycling products retailer Halfords (LON:HFD) confirmed its recently raised FY guidance after reporting strong H1 trading. The firm said its H1 performance was unerpinned by ‘momentum across the business’.
Strong H1 trading
For the six months to 2 October, the group posted a 7.1% increase in LFL (like-for-like) sales. Within that, retail LFL sales grew 7.7% with Motoring sales up 7.3% and Cycling sales up 8.3%.
As well as seeing the benefits of its strategic plan, the firm said it had seen strong demand for seasonal categories over the summer. Meanwhile, its Autocentres business, which repairs vehicles on-site, grew LFL sales by 6.1% in H1.
The firm repeated its raised FY guidance of pre-tax profit of between £55 million and £65 million. In August, when it published its upgraded view, the consensus forecast was for a pre-tax profit of £52.6 million.
As it said previously, accelerated investment in marketing and technology in H2 meant profit would be H1-weighted. The firm will publish its full H1 results on 26 November.
Halfords is yet another UK company outperforming expectations and defying the gloomy commentary around consumer sentiment. We can only put today’s share price drop down to the fact the stock has risen more than 80% year-to-date.
August’s increase in guidance was actually the second time the firm has raised its FY27 outlook. Back in June, on the back of forecast-beating FY26 numbers, CEO Henry Birch said results would be at the top end of the £46 million to £52 million range of estimates at the time.
The consensus now sits at £60.8 million, or around 20% above June’s forecast and almost 50% above FY26’s £41.5 million. Yet the FY28 and FY29 forecasts are for a combined increase of around 10%, despite the obvious progress the firm is making.
Halfords is a unique business combining products and services, consumers and businesses and a seamless online and in-store experience. If it can keep growing gross margins and its return on capital employed as it has done over the last three years, earnings forecasts and the shares should rise further.
