Halfords profits plunge but like-for-like sales creep up

Like-for-likes and total sales increased across both divisions in the 26 weeks to September 30.

Total retail sales rose 6.8% and 2.4% on a like-for-like basis.

Autocentre sales rose 3.6% and 0.9% on a like-for-like basis. Across the group, sales rose 6.3% and like-for-likes were up 2.2%.

Other areas of strength included online sales, which grew 30%, and Tredz & Wheelies, where revenues were up 25% year-on-year since acquisition.

However, pre-tax profits, before non-recurring items, dropped 12.1% to £40.8m. Every measure of profit dropped during the period.

Mitigating sterling decline

Boss Jill McDonald admitted the decline in sterling has been a “significant headwind”.

But she added: ”We are confident over time will be able to mitigage the impact. We have been working very hard with suppliers for them not pass on the cost increases to us.”

The group said that it expected full-year profit to be in line with market consensus.

Halfords said margins were hit by hedging issues that would also be “mitigated over time”; the impact from the lower-margin Tredz & Wheelies, which was included for the first time; deeper than usual cycling promotions; and investment in pay and training as part of its Gears programme, which has led to its lowest ever staff turnover.

The group said that it was delivering on its strategy by working towards a single customer view and single view of stock as well as developing its service-led proposition.

It refurbished 12 retail stores and 12 autocentres over the period, and opened two autocentres and two Cycle Republics.

McDonald said: “The first half sales performance was strong, improving through the period, with growth across all areas of our business.

“Our service-led offer is a key point of difference for Halfords and continued investment in this area has led to good progress in service-related sales.”