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Halfords Group PLC: Unaudited Preliminary Results: Financial Year 2024
Halfords Group PLC (HFD)
27 June 2024 Halfords Group plc Unaudited Preliminary Results: Financial Year 2024
Strong revenue growth of +7.9%, with underlying profit before tax of £36.1m1
Good strategic progress; market share gains helping to offset significant external headwinds
Strategically important Services business now represents more than half of Group revenue
Halfords Group plc (“Halfords” or the “Group”), the UK’s leading provider of Motoring and Cycling services and products, today announces its unaudited preliminary results for the 52 weeks ended 29 March 2024 (the “Period”).
FY24 Overview Our focus in FY24 has been to deliver on the areas that are within our control. We have made good progress both strategically and in further optimising the business to create a solid foundation for future growth. Business performance has, however, been impacted by continuing declines in the Consumer Tyres and Cycling markets, and in consumer demand for big ticket purchases. Successfully delivered on the areas within our control:
Good strategic progress:
Headwinds outside of our control worse than anticipated:
Whilst these headwinds have inevitably impacted the Group’s financial performance in the short-term, our strong and growing market positions provide us with significant opportunities for profitable growth. For example, the consolidation of the Cycling Market had a severe impact on Halfords in FY24, but as the clear market leader we expect to emerge in an even stronger position once market conditions normalise. In addition, a recovery in the Consumer Tyres market closer to Pre-Covid levels would provide significant opportunity for revenue growth. The Group’s ability to capitalise on these opportunities is underpinned by its strong balance sheet.
1. PBT from ‘Total Operations’, which is comparable to previous market guidance. Further explanation is provided in the Group Financial Summary. Graham Stapleton, Chief Executive Officer of Halfords, commented: “This has been a year of strong strategic and operational progress for Halfords, and we are pleased to have delivered a resilient financial performance against challenging core markets. We have continued to invest in our strategically important Services business, which for the first time now represents over half of our total revenues.
Our Autocentres business was the star performer yet again. This was delivered despite a challenging tyre market, where drivers continue to delay the replacement of unsafe tyres. In a recent survey of 6,000 tyres at Gatwick, Manchester and Edinburgh airports, we found that one in four vehicles had tyres that were dangerously worn or damaged.
We are determined to improve tyre safety in the UK, and we are equally committed to supporting our customers through the cost-of-living crisis, by delivering great value when they need it most. None of this would be possible without the hard work and commitment of our highly skilled colleagues and I am very grateful for their ongoing support.
While the short-term outlook remains challenging, we continue to build a unique, digitally-enabled, omni-channel business, which is well positioned for profitable growth”.
Current Trading and FY25 Outlook Trading since the start of FY25 has continued to be soft, impacted by low consumer confidence around big ticket, discretionary purchases, and poor spring weather, which has reduced store footfall and affected sales of both cycling and staycation products. Whilst we continue to expect market share gains in the year ahead, based on what we are currently seeing we now expect market volumes to decline in FY25 in cycling and consumer tyres, and to remain broadly flat in motoring servicing and retail motoring products. Inflation remains a material headwind, particularly driven by the 10% increase in the national minimum wage. More recently we have seen very significant increases in sea freight rates, with spot rates more than doubling since the start of our financial year. Whilst we continue to successfully secure rates well below market spot rates, we now forecast freight costs to be £4-7m higher than we anticipated at the start of the year. Against this backdrop, we continue to focus on optimising the platform we have built, and controlling what we can. As such, we plan for proportionately fewer resources to be allocated to strategic transformation, as set out in more detail at the end of the Strategic and Operational review. We do not expect these headwinds to persist in the long term. Consumer price inflation is easing and our core markets are expected to improve in the mid-term. We remain confident that the financial targets announced at the April 2023 CMD are achievable assuming markets ultimately recover as forecast, albeit this will take longer than we envisaged last year. We remain very confident in the Group’s strategy, as we build a stronger and more resilient platform for the future and continue to take market share. Group Financial Summary Results from Continuing Operations:
During FY24, we committed to close our tyre supply chain operation, outsourcing the activity to a third-party, Bond International. As such and in accordance with financial reporting standards, these operations (Viking and BDL) have been classified as ‘Discontinued’ in our accounts for both the FY24 reported period and the FY23 comparator. The Income Statement further below has been presented to show Continuing Operations as the primary view, in accordance with IFRS 5. However, the total result of the Group is a more accurate comparison to previous market guidance. It is also more reflective of ongoing profit because it includes the ongoing cost of running the tyre supply chain, which in future will be outsourced. We have, therefore, presented in the table below the total results of the business, including the Discontinued Operations. Further details of the restructuring are provided in the Chief Executive’s statement. Results from Total Operations (Continuing and Discontinued):
Group Revenue Summary
Market Volume and Share
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