Halfords profits and revenue fall as big-ticket sales stall

The cycling and autocentres retailer posted a 2.5% fall in pre-tax profit to £27.5m in the 26 weeks to September 27, down 15.1% on an underlying basis excluding the impact of IFRS 16 to £44.9m.

Overall revenue decreased 2.9% to £582.7m year on year, down 2.4% on a like-for-like basis as a 2.1% uplift in sales across the retailer’s autocentre division failed to offset a 3.1% slide in sales across the business’ retail arm.

Halfords attributed this decline to softer sales on big-ticket discretionary items, but said cycling sales grew and, in motoring, core categories gained market share.

The retailer also snapped up independent garage chain McConechy’s Tyre Service during the period for £9.3m, comprising 60 sites and 100 vans across Scotland and the North of England which provide a range of services including “tyre fitting and vehicle servicing, maintenance and repair for both retail and commercial vehicles”.

Halfords described the acquisition as “highly complementary” to its existing offer as it seeks to grow its service proposition. The deal will allow Halfords to serve customers across 900 locations across the UK.

The specialist retailer improved margins across its retail and autocentres divisions by 40 basis points and 110 basis points respectively.

Halfords is also accelerating its strategy in a bid to drive service and autocentre sales, and plans to combine its estate of garages, retail stores and mobile vans to increase it services footprint “to over 1,200 locations in the medium term, including 550 garages and 200 mobile vans”.

Chief executive Graham Stapleton said: “In a period where retail sales were impacted by weakened consumer confidence, we are pleased to have successfully increased gross margin, kept a tight control over costs, and seen growth from our strategic investment.

“Twelve months on from the launch of our strategy to inspire and support a lifetime of motoring and cycling, we have made encouraging early progress. Our Autocentres business delivered strong growth in the half, while new initiatives helped to drive top-line momentum in group services, online and B2B.

“We are clear that our service-led strategy is the right one for Halfords. Our unique position, growing services business and positive macro-customer trends, gives us confidence that this is the right time to accelerate investment, leveraging our trusted household brand to become a clear market leader in motoring services.

“Over the medium term, we expect service-related sales to double as a percentage of group sales and Autocentres to represent a materially larger proportion of Halfords’ profits. As a result, motoring will inevitably grow in focus for the group. We are confident that this strategy will drive long-term sustainable growth.”