Halfords warns of uncertainty following Budget and raises profit outlook

Halfords has announced on Tuesday their profits are set to be better than expected, but the retailer warned the tax policies in the Budget has left consumer outlook remains uncertain.

Over the Christmas period like-for-like sales rose by 13.1% in December and the colder weather helped sales to rise 5.5% in January.

On Tuesday morning shares in the motoring and bikes retailer surged by more than a fifth and underlying pre-tax profits are now expected to be between £32 million and £37 million compared to forecasts of £28.3 million.

Halfords said, “Despite the recent positive performance, there remains considerable uncertainty regarding the outlook for the UK consumer in light of measures introduced by the autumn Budget, which take effect from April.”

The retailer added, “While the impact of changes to the minimum wage and national insurance contributions are relatively easy to quantify… their effects on the demand environment and health of the broader economy are harder to predict.

“In recent months we have seen an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures.”