Proactive Investors - Halfords Group PLC (LON:HFD) backed its full-year outlook despite third-quarter sales coming in below expectations.
“We continue to expect [pretax profit] to fall within the previously communicated range of £48 million to £53 million,” it said.
“Whilst Q3 sales were below expectations, a strong start to Q4 trading, further cost action and resilient areas such as B2B performing well, mean that we are confident in the Q4 outlook,” it added.
The cycling and motor retail and repair specialist said group revenue rose 2.0% on a like-for-like (LFL) basis in the third quarter to 29 December, with stronger sales in motoring and needs-based categories partly offset by weaker spend in discretionary areas.
Halfords saw a big swing in performance during the period with sales in October and November strong, but much weaker in December, driven by a combination of mild and wet weather impacting demand for winter products and footfall into stores, and customers paring back spending in the lead up to Christmas.
This was most pronounced in Retail Motoring, where monthly LFL growth averaged 10.2% in October and November but fell to a 15.3% decline in December.
In January, sales growth in Retail Motoring returned to the levels seen in October and November as conditions normalised, the firm added..
Nonetheless, market volumes remained below expectations: Cycling market volumes were down 5.1% in the quarter and Consumer Tyres were down 2.6%.
Halfords said it has launched a partnership with specialist tyre distributor Bond International which will result in a cost reduction of c.£5 million per annum from 2025 onwards.
It also plans to roll out its Fusion concept to 10 towns following successful trials in Colchester and Halifax, where it has seen a near doubling of revenue and an even greater increase in EBITDA in the garages in those towns.
The firm now expects cost savings in 2024 to exceed £35 million, an increase to the £30 million target announced previously.