Halfords to invest £100 million in growth as it reports profit fall
Pre-tax profits at Halfords fell by 24.5% to £71 million in the year to end March, despite a rise in sales, as the car parts and cycle retailer increased its costs and invested in its autocentres.
Group revenue rose 1% to £871.3 million with like-for-like sales up 0.3%. Sales at the group’s autocentres climbed 13.5% to £125.8 million but retail sales fell by 0.9% to £745.5 million and by 0.7% on a like-for-like basis.
Although the group enjoyed a strong summer of cycling sales after a disappointing start to the year, poor sales of kids and mainstream bikes at Christmas continued into the final quarter as the prolonged winter weather delayed the start of the family cycling season. Like-for-like sales of cycles were down 0.6% for the year.
Like-for-like sales of car maintenance products and services grew by 5.1%, which was helped by the long period of cold winter weather as demand for the retailer’s Wefit service continued to grow.
In the car enhancement category, like-for-like sales fell by 4.2% although this was a slower rate of decline than in previous periods. Sales of Sat Navs were flat while audio sales grew by 2.8%. The group said it had made further market share gains for digital radio which meant that it had now captured around three-quarters of the market.
Like-for-like sales in the travel solutions category declined by 6.8% following reduced demand for camping and touring products due to the wet weather both last summer and this spring.
Online revenues grew by 15.9% and represented 10.3% of retail sales compared to 8.9% in the prior year. The group said it continued to improve the online experience for customers with the launch of a new search engine to make it easier for shoppers to search and navigate the site. It also introduced our new 24-hour Reserve & Collect service and rebalanced its promotions to focus more on product price rather than percentage discounting.
During the period, Halfords invested in opening 23 new autocentres, taking the total number to 283.
Today, Halfords also announced the launch of its new three year growth strategy Getting into Gear, in which the group will invest £100 million in modernising stores, improving customer service, and improving the digital infrastructure.
Matt Davies, chief executive, said the new strategy was designed to "significantly improve" the retail customer experience and help bring about sustainable and profitable sales growth.
He added: "This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities. We expect these vital investments will inevitably reduce short-term retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value."
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