Strong half-year trading was overshadowed by a warning that profits will lean heavily on the first six months as the retailer ramps up spending on marketing and technology.
Halfords Group (LSE: HFD) saw its shares slide 8% on Wednesday after the motoring and cycling retailer paired a solid first-half trading update with a warning that profit this year will be skewed towards the opening half as it pours more money into marketing and technology.
The group reported group like-for-like sales up 7.1% for the 26 weeks to 2 October, with retail like-for-like sales ahead 7.7%, driven by growth of 7.3% in motoring and 8.3% in cycling. Its autocentres arm also grew over the period. Despite this, investors focused on management's confirmation that heavier second-half investment would tilt the profit split away from the back end of the year, triggering the sharp sell-off.
Halfords said the first-half performance had been underpinned by strong demand for seasonal products through the warm summer months and continued momentum across the business, as it executed against its strategic priorities.
Crucially, the company reiterated its full-year underlying pre-tax profit guidance of between £55m and £65m, effectively confirming the upgrade it had flagged back in August. That reassurance on the full-year number was not enough to offset concerns about the timing of profit delivery and the scale of planned spending in the second half.
Chief executive Henry Birch said the business moved into the second half with confidence, pointing to further detail due at the interim results next month. Investors will be watching that update closely for clarity on how the stepped-up marketing and technology investment is expected to pay off, and whether the full-year guidance range can be maintained.
This report is based on Halfords Group's announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Tem Rysh on Unsplash.