Halfords Group PLC (GB:HFD) stock surged over 12% as of writing after the British retailer posted upbeat first-half profits for FY25. The company posted an underlying pre-tax profit of £21 million, beating Visible Alpha’s £15 million forecast but marking a 1.4% decline from last year. Nonetheless, the company attributed its H1 performance to its retail segment and effective cost-control measures.
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Halfords is a retailer of motoring, cycling, and leisure products, along with a range of associated services in the UK.
Halfords Eyes Price Hikes amid Budget Impact
Along with its interim results, Halfords highlighted the impact of the Autumn Budget on its costs. The company is looking at an additional £23 million in direct labour costs due to measures announced by the UK government. Within this, Halfords revealed that only about £9 million had been accounted for in FY26 and mitigated in its plans.
Moving ahead, the company stated that the UK budget’s impact on consumer behaviour and the direction of its end markets remains uncertain. As a result, the company may increase prices for car servicing and repairs.
Overall, Halfords remains confident about achieving its guidance for FY25.
Halfords Marks Steady Progress Despite Market Pressures
Among its segments, Halfords’ Retail business delivered an underlying EBIT (earnings before interest and tax) of £21.2 million, up from £19.6 million in H1 FY24. This was driven by a 200bps (basis points) increase in gross margin, supported by strong pricing strategies and stronger-than-expected market trends.
On the other hand, in the Autocentres segment, EBIT declined to £9.1 million compared to £11.4 million a year ago. This highlighted headwinds such as reduced sales and higher labour costs.
Meanwhile, the company declared an interim dividend of 3p per share, in line with the previous Fiscal Year.
Are Halfords Shares a Good Buy?
On TipRanks, HFD stock has a Hold consensus rating based on one Hold recommendation from RBC Capital analyst Manjari Dhar. The Halfords share price target is 160p, which is 11.6% higher than the current trading levels.
Notably, this rating was assigned before the H1 results and may be subject to change.
