Halfords issues surprise consumer tyre-related profit warning

After years of strong and often tyre-driven profit growth, Halfords Group plc has warned investors that “further material weakening” in “cycling, retail motoring and consumer tyres” will result in “a significant drop in like-for-like revenue growth”. As a result, that specifically means £13 million less “underlying profit before tax (PBT)”, than previously stated or PBT “in the range of £35-40 million”.

On 25 January 2024 Halfords executives had said they expected PBT “for the 52-week period ending 29 March 2024 to be between £48 million and £53 million, assuming markets did not weaken further…” According to Halfords, volumes in the consumer tyres market fell by “4.3% pts in January (vs a decline of 2.6% pts in Q3)”.

However, Halfords reports that the company continued to deliver “good growth” in its Autocentres business based on non tyre business: “Although the consumer tyres market worsened in January, we saw a strengthening Service, Maintenace and Repair “SMR) market and we continue to see good customer demand in this area.”

And it is also worth noting that Halfords repeatedly refers to weakening in “the consumer tyres market” and not in relation to the resilient and profitable Halfords Commercial Fleet Services truck tyre-related business.