Cycle and car parts specialist Halfords has posted a 24.5% slump in pre-tax profits to £71m as chief executive Matt Davies unveils his £100m investment plan.

The three-year Getting into Gear 2016 plan to improve its retail arm revealed today focuses on delivering a “step change” in customer service; improving its IT, store estate and digital proposition; and creating ‘The H Factor’ in becoming an authority in its categories. Davies has set a group sales target of £1bn by 2016.

The retailer reported an increase in group revenue of 1% to £871.3m in the year to the end of March. Retail sales fell 0.9% to £745.5m while its Autocentres garage division rose 13.5% to £125.8m.

Davies said Halfords’ strategy to open 20-30 new Autocentres per year remains unchanged.

Halfords said that retail operating costs rose 5.3% in the year after investing in its new strategy and staff.

Davies said: “Halfords’ retail sales performance in full-year 2013 reflected a demanding trading environment and demonstrated how we can exploit our offer with investment and by focusing on areas of opportunity. The Autocentres performance was satisfactory against a backdrop of a declining market and particular challenges in the fleet sector. The fall in group profitability, however, illustrates the pressing need for sustainable revenue growth to offset ongoing cost inflation.”

He added: “Today I am announcing our Getting Into Gear 2016 plan, designed to significantly improve our retail customer experience and bring about sustainable and profitable sales-growth momentum. This programme will focus on supporting our colleagues to deliver consistent, friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities.

“We expect these vital investments will inevitably reduce short-term retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value.”