Halfords expects dip in demand for cycling and tyres as weather and costs curb spending

British retailer Halfords Group expects demand for cycling and consumer tyres to be weak this fiscal year as consumers stung by inflation limit purchases of non-essential goods, it said on Thursday.

The company, which is more than 130 years old and has retail stores, garages, mobile vans and home delivery services, reported an 18.3 per cent fall in annual profit, broadly in line with analyst expectations, as purchases of products for cycling and domestic holidays decreased.

Halfords operates about 20 outlets in the Republic.

Shares of the company fell by as much as 8 per cent in early trade, but were 2.2 per cent higher by 8:13am.

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The company blamed cool and wet weather early in the year for reduced staycation spending, while Britain’s prolonged cost-of-living crisis further limited discretionary spending.

Halfords’ costs have also risen and it expects freight costs to be £4 million (€4.7 million) to £7 million higher than it foresaw at the start of the year.

“Elevated cost inflation continued to be a significant headwind,” the company said.

It predicted a negative impact until the end of the current fiscal year next April, but said the impact, which it considered to be industry-wide, was not long-term. Inflation in Britain has eased, according to the latest official figures.

[ UK inflation falls to 2 per cent target for first time in three years ]

In February, Halfords said it was seeing “very challenging and exceptional short-term market conditions” and was cautious about a recovery.

For the reporting period, underlying pretax profit from total operations came in at £36.1 million (€42.7 million), down from the £44.2 million it logged last year.

Analysts on average had expected the company to report a profit of about £36.2 million, a company-compiled consensus showed.

“There should come a time when the hard work in these difficult years comes to fruition. However, for now, forecast momentum is negative,” analysts at Peel Hunt wrote in a note.

– Reuters