Profits at Halfords drop amid consumer cutbacks on non-essentials
Retailer Halfords has seen interim profits halve and warned the full-year result will be at the bottom end of its expectations as under-pressure consumers cut back on non-essential spending.
The car parts to bicycle chain reported underlying pre-tax profits of £29 million for the six months to September 30, down from £57.9 million a year ago, with the previous year’s results boosted by £9.2 million of business rates relief.
Revenues rose 10.2% to £765.7 million over the first half but retail like-for-like sales were 6% lower year-on-year as it saw consumers rein in spending on bikes, where sales plunged 12.5% as it came up against strong trading the previous year.
Halfords said it was seeing “resilient trading in the more needs-based categories, but there has been a softening in the more discretionary areas”.
“It remains challenging to predict consumer confidence for the remainder of 2022-23 but we don’t expect the challenges that businesses are facing to dissipate soon,” it added.
The group cautioned it is now expecting full-year underlying pre-tax profits at the lower end of its previous guidance for between £65 million to £75 million.
However, it cheered the success of its car servicing and motoring business, with service-related sales now accounting for 42.6% of all group revenues and expected to rise to more than 50% in its next financial year thanks to its recent acquisition of Lodge Tyre.
Halfords – the UK’s largest provider of motoring services with more than 600 garages and nearly 700 vans – said it was launching a recruitment drive to fill 1,000 new automotive technician roles over the next year to boost its burgeoning car servicing offer.
The move will see it prioritise over-50s, women and disadvantaged young people for the jobs.
Graham Stapleton, chief executive, said: “We are hoping to attract retirees back into the workforce as well as increasing the number of women in technician roles.”
He added: “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.
“Once the acquisition of Lodge Tyre has annualised, service-related sales will account for over 48% of our revenues and we expect this to grow to over 50% next year. Lodge Tyre will also mean motoring represents around 77% of total sales.
“The success of our motoring loyalty club is exceeding our expectations, as customers continue to be attracted by a range of discounts and offers that are aimed at helping motorists across the UK with the rocketing cost of running and maintaining a car.”
Published: by Radio NewsHub