Profits down at Halfords as shoppers cut back on discretionary spending
Halfords has seen its underlying pre-tax profit decline to £29 million in its first half from £57.9 million a year earlier.
Revenue increased by 10.2% to £765.7 million in the six-month period to 30 September, although sales were down by 1.5% on a like-for-like basis. While sales at Halfords’ autocentres business climbed by 14.3% year-on-year, sales in the retail motoring and cycling categories fell by 1.5% and 12.5% respectively.
Halfords said service-related sales now represent 42.6% of group revenues and are expected to reach around 48% of sales following its acquisition of Lodge Tyre. Furthermore, over half of group sales expected to come from services in the new financial year.
The increase in services demand means that the retailer will be looking to fill 1,000 new automotive technician roles in the next 12 months.
Graham Stapleton, chief executive of Halfords, said: “This has been a period of strong strategic progress and resilient financial performance for Halfords. In such a volatile macroeconomic environment, our strategy of focusing on the kind of predictable and recurring revenue that comes from motoring services and needs-based products has never been more relevant.”
Giving an update on its second half performance, Halfords said trading has been strong in needs-based areas, although sales of more discretionary items have softened.
The retailer is now expecting its full year pre-tax profits to come in at the lower end of its £65 million to £75 million range.
