Halfords' share price jumps as company cuts costs to keep profit on track

 
Catherine Neilan
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Tour Series Round One - Milton Keynes
Weather must improve for Halfords' sales to take off (Source: Getty)

Halfords's share price jumped this morning after the group cut back expected costs in its retail arm, enabling it to keep its profit guidance unchanged following muted third quarter sales.

The figures

Total revenues for the 15 weeks to 15 January were up 0.4 per cent across the group, but for its retail division sales actually fell 0.3 per cent. Autocentres steered the business back into growth with a 4.1 per cent rise.

Like-for-likes were also pretty muted, with the group nudging up 0.3 per cent, while its retail division was flat. Autocentres' revenue climbed 1.9 per cent.

For the year to date, total group sales are up 1.3 per cent while like-for-likes are up 1.2 per cent.

Investors clearly weren't expecting much, however: Halford's share price has jumped more than nine per cent in early trading.

Halfords Halfords | mobile image

Why it's interesting

Halfords has not changed its full year guidance, with profits expected to come in between £78m and £82m, but it has noted that retail operating costs will come in lower - between one and two per cent, down from 2.5 to 3.5 per cent previously guided.

According to independent analyst Nick Bubb, this could be the sole reason for the company not issuing a profit warning this morning.

What Halfords said

Chief executive Jill McDonald said: "We are pleased with the group's performance, given the unprecedented weather conditions. Particularly pleasing was the strong growth in service-related sales and a return to LFL growth in cycling.

"We achieved a record day online over the Black Friday weekend, our highest ever day for total sales on 23 December and further improvements in customer service metrics. In Autocentres we achieved a ninth consecutive quarter of LFL growth. I would like to thank our colleagues for all their hard work over the busy Christmas period."

In short

Halfords will be hoping for improved weather to bolster it sales for the last quarter of its financial year.

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