Retailer Halfords has said profits are set to be better than forecast thanks to a recent recovery in trading, but warned of an uncertain consumer outlook after the tax-raising Budget.
The car parts-to-bicycles company said retail trading rebounded over Christmas, with like-for-like sales jumping 13.1% in December.
The group added that motoring ranges also benefited from colder weather since the start of the year, with comparable sales up 5.5% so far in January.
Despite the recent positive performance, 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
Halfords
Shares surged by more than a fifth in Tuesday morning trading as Halfords said it now expects full-year underlying pre-tax profits of between £32 million and £37 million, compared with the analyst consensus of £28.3 million.
But it warned: “Despite the recent positive performance, 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.”
The group revealed in November that it faces around an extra £23 million in wage costs after the Government’s move to announce a rise in national insurance contributions and the minimum wage from April.
“While the impact of changes to the minimum wage and national insurance contributions are relatively easy to quantify… their effects on the demand environment and health of the broader economy are harder to predict,” Halfords said.
It signalled again that prices will rise as a result of cost pressures across its Autocentres arm as it said it expects to see “inflation passed through on managed services”.
In recent months we have seen an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures
Halfords
The trading in its third quarter covering the festive period saw like-for-like sales growth across both retail and Autocentres, which marked an improvement after a flat performance in the first half.
It saw pre-tax profits fall 23.3% to £17.8 million in the six months to September 27, down 1.4% on an underlying basis.
In its latest update, Halfords said: “In recent months we have seen an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures.”
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