Halfords upgrades FY25 guidance but braces for £23m budget hit

Halfords has upgraded its profit before tax guidance to between £32m and £37m for FY25, thanks to recent trading and the retailer’s continued strategic progress. 

However, the business has noted that the changes coming in April are due to add some £23m to Halfords’ direct labour costs for FY26 alone.

During the third quarter, like-for-like sales growth was positive in Halford’s retail segment and autocentres. 

Halfords retail business traded well over the peak trading period as its product and promotional proposition “resonated well with customers”, notably in cycling, where Christmas gifting contributed to like-for-like sales growth of 13.1% in December. 

According to Halfords, current trading has benefitted from the colder weather in more recent weeks, with the motoring product segment delivering like-for-like sales growth in January of 5.5%. 

In addition, hedged FX rate in cost of goods sold is expected to be better than anticipated in FY25, while freight headwinds are now expected below the previously guided range of £4m to £7m. 

This has led to well-managed costs, and to Halfords to be on-track to exceed the £30m full-year target previously indicated. 

Despite the recent positive performance, Halfords noted that there remains “considerable” uncertainty regarding the outlook for the UK consumer in light of measures introduced by the autumn budget, which take effect from April and hence are in force for the entirety of FY26.