Halfords Group (HFD) H2 2025 earnings summary

Executive summary

• Achieved underlying profit before tax (PBT) growth of 6.4% to £38.4m, with 2.5% like-for-like sales growth and 250bps gross margin expansion, despite inflationary pressures.

• Delivered £35m in cost and efficiency savings, offsetting £33m of inflation, mainly from labour costs.

• Free cash flow rose by £14m to £43m, and net cash improved by £18.2m year-over-year to £10.1m.

• Dividend increased by 10% to 8.8p, covered 1.5x by profit after tax, reflecting balance sheet strength and confidence in future growth.

• Strategic focus on Fusion garage rollout, Motoring Club membership growth, leveraging data, digital capabilities, and proven initiatives.

Financial highlights

• Group gross margin up 250bps to 50.7%, highest in three years, driven by better buying and price optimization.

• Like-for-like sales grew 2.5% year-over-year; retail LfL up 2.1%, cycling returned to growth for the first time since 2021.

• Autocentres like-for-like sales up 3.7%, with EBIT (ex-Availor) up 21.2% YoY and gross margin up 320bps to 52.5%.

• Non-cash impairment charge of £49.1m and £14.9m closure costs led to a statutory loss before tax; non-underlying items totaled £68.4m, mainly goodwill impairment.

• Operating costs were 47.8% of sales, up 230bps year-over-year.

Outlook and guidance

• FY26 trading in line with expectations; profit expected to be H2-weighted due to cost increases and investment plans.

• Over 100 Fusion garages targeted by year-end, with at least 60 more sites planned for FY26; continued focus on premium Motoring Club membership and digital transformation.

• Over £20m of cost savings identified to mitigate inflation in FY26.

• Capex planned at £60m to £70m, with continued investment in Fusion, digital experience, and systems.

• Cost headwinds from wage and NI increases to be mitigated by ongoing cost savings and pricing actions.