Halfords beats profit forecasts but cautious about consumer spend

(Sharecast News) - Auto and bike parts retailer and garage chain Halfords reported full-year profits ahead of market expectations, driven by solid underlying revenue growth and improved margins, but said it remains "somewhat cautious" about the outlook for consumer spending. Trading in the early weeks of FY26, which began on 29 March, has been line with expectations, though chief executive Henry Birch expressed uncertainty regarding how the macro environment will impact how customers spend their money.

"While inflation appears to be moderating and interest rates are falling, the negative outlook for employment and the impact of geopolitical instability continues to weigh on confidence and is keeping the savings ratio high despite rising real incomes," he said.

Nevertheless, Halfords reiterated its plans to offset another year of elevated inflation through a combination of "pricing, buying and cost opportunities".

Revenues totalled £1.72bn in the 52 weeks to 28 March, up just 0.1% on a reported basis buy 2.5% ahead in like-for-like terms, with 3.7% growth in the Autocentres division and 2.1% in Retail.

Underlying pre-tax profit was 6.4% higher than the previous year at £38.4m, ahead of the previous guided £32m-37m range, with gross margins rising 250 basis points to 50.7%.

The company delivered £35m in cost savings during the year, offsetting £33m of inflationary costs due to increases in the minimum wage and the cost of training employees.

The company raised its total dividend for the year by 10% to 8.8p, in line with its payout policy.