Halfords Group PLC on Thursday proposed a lower dividend as profit edged down, but said it anticipates that headwinds will abate in the medium-term.

The Redditch, England-based cycling and motor products retailer reported revenue in the year to March 29 rose 7.9% to £1.70 billion from £1.57 billion.

Pretax profit shrunk 0.5% to £38.8 million from £39.0 million.

Halfords proposed a final dividend of 5 pence per share, bringing the total payout to 8p, 20% lower than 10p paid for financial 2023.

‘Trading since the start of FY25 has continued to be soft, impacted by low consumer confidence around big ticket, discretionary purchases, and poor spring weather, which has reduced store footfall and affected sales of both cycling and staycation products.

‘Whilst we continue to expect market share gains in the year ahead, based on what we are currently seeing we now expect market volumes to decline in FY25 in cycling and consumer tyres, and to remain broadly flat in motoring servicing and retail motoring products,’ Halfords said.

Halfords noted inflation is a ‘material headwind’, highlighting the 10% increase in the UK national minimum wage, while predicting freight costs will be £4 million to £7 million higher than anticipated in the new year.

However, it adds: ‘We do not expect these headwinds to persist in the long term. Consumer price inflation is easing and our core markets are expected to improve in the mid-term.’

Halfords shares rose 3.4% to 140.60 pence each on Thursday morning in London.

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