Halfords has slashed its profit guidance for the year as demand for motoring and cycling products softens amid the cost of living crisis.
The retailer enjoyed a boom during the pandemic but over the past year has come under pressure due to soaring inflation and weakening consumer confidence.
Halfords told investors on Thursday it had seen prolonged weakness in the consumer tyre market and expects a deeper decline in demand for higher-ticket retail items.
Halfords issued its third profit warning since last June as demand in the consumer tyre market softens
It also said it had struggled to recruit technicians for its autocentres business amid a tight labour market, which would ‘limit growth of higher margin sales during the important upcoming Q4 MOT peak’.
As such it expects full-year underlying profit before tax to come in at between £50-60million, down from £65-75million.
It marks the third time the retailer has issued a profit warning since June 2022.
Halford shares were down more than 20 per cent in morning trading to 169.12p, and are down more than 50 per cent over the course of the past year.
The cut to its annual profit guidance came despite a 21.7 per cent and 4.6 per cent growth in revenue and like-for-like sales, respectively.
CEO Graham Stapleton said: ‘We have seen strong revenue growth in what are exceptionally challenging circumstances, and we have continued to grow our market share whilst also tightly managing our costs, inventories and cashflows.
‘Consumer demand for our services and needs-based categories, which now account for the majority of our revenue, continues to grow, and our Motoring Loyalty Club is exceeding expectations as customers recognise the value of its unrivalled discounts and offers.’
Halfords has been one of the few retailers to disappoint shareholders in recent weeks, as supermarkets received a surprise boost over the Christmas period.
Marks & Spencer cheered record food sales and its highest clothing and home market share for seven years this morning.
Halfords said it did not expect a significant short-term recovery in high ticket, discretionary spending but anticipates the consumer tyre market to recover this year.
It added: ‘We remain confident in the longer-term outlook and believe the business is well positioned to capitalise on the strong platform we have built as market conditions improve.’
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