Halfords profits to rise 12% but like-for-likes fall

For the first half ending October 1, group pre-tax profit is expected to be in the range of £67-69m.

Group revenues were up 7.6%, reflecting the acquisition of Nationwide Autocentres in February. Like-for-likes in retail fell 4.5% and in Autocentres fell 0.8%.

During the second quarter, group sales increased by 5.5% and in the period it concluded its 18-month programme to transition the group’s existing distribution centres to a more cost efficient configuration. It said the impact on sales during this period was expected to be around 1.4% on the second quarter. On an underlying basis, excluding the disruption to sales, like-for-likes fell by 4.9% in retail. Autocentres like-for-likes fell 1.5%.

In its retail division, Halfords said it achieved low single digit like-for-likes in its most profitable category, car maintenance. It said its camping performance was “encouraging”, delivering a mid single digit year on year increase. Multichannel was up 60%.

In cycling, like-for-likes were down 1%, which it said reflects short-term weakness as a result of delays in the relaunch of new cycle ranges in the period and increased levels of price competition. Sales of Boardman cycles increased by 40%. It said it is now taking steps to realign its range and pricing to “more accurately reflect current consumer needs and tastes”.

In car technology remained “challenging” with sat nav sales in the first half down 16% like-for-like.

It said it continues to manage costs proactively. The programme of store staff re-rostering was completed in the first quarter, and along with establishing a more flexible cost base, it is confident the programme will reduce annual costs by around £4m.

Chief executive David Wild said: “Halfords will deliver solid profit growth in the first half despite the challenging environment. We continue to improve our cost base and in the past few months have successfully addressed a number of company issues, such as the reconfiguration of our warehousing and distribution infrastructure.

“We are meeting the challenges presented by a more cautious UK consumer by building on Halfords’ retail market leadership and strong business model. The integration of our Autocentres business is continuing well and, after this year of investment, we are well positioned to accelerate earnings growth. 

“We are cautious about the macro-economic environment. Following a strong performance in the first half we intend to selectively re-invest the margin gains achieved by increasing our promotional stance.  Our plans for the business are therefore based on the assumption that like-for-like sales in the remainder of year will settle at c. -3%. Through maintaining our focus on the cost reduction programmes already in place we would expect full year profit growth to be within the range of market expectation.”