By Echha Jain
(Reuters) -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 over 130-year-old company, which has retail stores, garages, mobile vans and home delivery services, reported a 18.3% fall in annual profit, broadly in line with analyst expectations, as purchases of products for cycling and domestic holidays decreased.
Shares of the company fell by as much as 8% in early trade, but were 2.2% higher by 0813 GMT.
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’s costs have also risen and it expects freight costs to be 4 million-7 million pounds 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.
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 pre-tax profit from total operations came in at 36.1 million pounds ($45.62 million), down from the 44.2 million pounds it logged last year.
Analysts on average had expected the company to report a profit of about 36.2 million pounds, 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.
($1 = 0.7913 pounds)
(Reporting by Echha Jain in Bengaluru; Editing by Subhranshu Sahu and Barbara Lewis)
