Halfords Group (HFD) H2 2025 earnings summary

Executive summary

• Underlying PBT grew 6.4% year-over-year to £38.4m, exceeding guidance, with 2.5% like-for-like sales growth and 250bps gross margin expansion, supported by strong cost control and efficiency savings.

• Free cash flow increased to £43.0m, with net cash position (ex-leases) of £10.1m, and a 10% dividend increase to 8.8p per share.

• Strategic initiatives such as the Fusion garage rollout and Motoring Club membership growth are driving differentiation and customer engagement, with 50 Fusion sites live and plans for at least 60 more in FY26.

• Leadership changes and estate optimization, including closure of underperforming sites, are expected to support future growth and operational excellence.

• Non-cash goodwill impairment of £49.1m (mainly retail) led to a reported statutory loss, driven by higher discount rates and revised forecasts.

Financial highlights

• Like-for-like sales up 2.5% year-over-year, with group revenue at £1,715.2m and gross margin at 50.7% (+250bps YoY), the highest in three years.

• Underlying EBIT was £49.5m (+0.6%), underlying EBITDA £180.6m (+1.6%), and underlying basic EPS up 8.7% to 13.8p.

• Free cash flow of £43.0m, net cash (ex-leases) of £10.1m, and net debt (inc. leases) reduced to £261.3m.

• Dividend per share up 10% to 8.8p, covered 1.5x by profit after tax.

• Non-underlying items totaled a £68.4m charge, mainly non-cash goodwill impairment.

Outlook and guidance

• Early FY26 trading is in line with expectations; profit expected to be H2-weighted due to cost phasing and non-recurring warehouse system costs.

• Over 100 Fusion garages targeted by year-end FY26, with capex planned at £60–70m and continued investment in digital, category management, and customer experience.

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

• Lower free cash flow anticipated in FY26 due to higher capex and incentive payments.

• Confident in future trajectory and strategic plan.