Halfords profits fall despite full-year sales rise

The auto and cycling specialist revealed a 7.2% rise in revenue, from £1.02bn in 2015 to £1.10bn in the 52 weeks to March 31, 2017.

The retailer attributed this to a “strengthened services proposition, new product ranges, investments to modernise the business” as well as its acquisition of Tredz and Wheelies.

Despite this top line rise, profits fell.

Underlying pre-tax profit was down 7.5% to £75.4m and pre-tax profit dropped from £79.8m to £71.4m.

Underlying EBITDA shrank 5.1% to £108.7m.

Sales growth was led by its retail arm, where total sales rose 8% to £938.4m, or 3.1% on a like-for-like basis.

The highest performing division within retail was travel solutions, up 7.9%, and the lowest was car enhancement, down 2.8%.

­Autocentre revenue rose 2.4% to £156.6m, or 0.6% on a like-for-like basis.

Chief executive Jill McDonald said the retailer was taking a three-pronged approach to recovering profitability in the year ahead which comprised working with suppliers to mitigate currency fluctuations, driving business efficiencies and raising prices - though MacDonald stressed that this would be “a last resort.”

The retailer posted a boost 3.9% boost in like-for-like sales for the 15 weeks to April 30.

“We’re watching it like a hawk but we have no seen any impact on our consumer sentiment at the moment,” said the Halfords boss, who is set to join M&S as its new clothing and home boss later this year.

Strategic progress

Halfords said that it had made strong strategic progress over the year but admitted that it needed to review its autocentre operating model to improve profitability.

It added that its “evolved retail store concept” was performing well and that it plans to add roll out this format to around 30 stores over its next financial year.

The retailer’s Cycle Republic fascia also performed well and posted a 20% jump in like-for-like sales during the period, with plans to launch an additional five stores this year in city centres. 

“I am pleased with the performance this year, with sales growth across all areas of our business and market share gains in both motoring and cycling,” said McDonald.

“Profit performance for the year was impacted by the weaker pound but our plans are well developed and I am confident this will be offset over time.

“We have made great progress with our ‘Moving up a Gear’ strategy, with increased customer insight and sustained growth in service-related sales being particular highlights.”

Commenting on McDonald’s departure, chairman Dennis Millard added: “We are grateful for the positive contribution Jill has made across the business and she will leave Halfords with a strong team in place and a clear direction to drive future growth.

“Our priorities remain unchanged, including consolidating our service and services credentials, continuing to invest in our colleagues, and further investment in our shops and online platforms.”

Exclusive

Coinciding with Halfords’ full-year results, people director Jonathan Crookall has rolled back on his slated departure to drinks retailer Conviviality.

Crookall’s planned departure from the cycling retailer was revealed by Retail Week in March and came shortly after the exit of former commercial director Emma Fox.

However, McDonald told Retail Week that Crookall has now decided to stay with Halfords. “It’s a decision he has made and we’re absolutely delighted he’s staying,” she said.