Halfords drives profit growth as it accelerates transformation

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Halfords has reported a strong full-year performance after increased demand for categories such as cycling, partly fuelled by the pandemic.

Halfords’ revenues and profits advanced as it “rapidly accelerated” its transformation. However, the retailer warned of uncertainty ahead, including supply challenges.

Halfords’ sales rose 13.9% like-for-like to £1.29bn last year, when underlying pre-tax profit climbed 72% to £96.3m.

Like-for-likes at Halfords’ retail division rose 14.6%, powered by cycling, which was up 54.1% as people adopted the mode of transport during the pandemic.

“Positive momentum” has continued into the new financial year. Cycling demand remains “elevated” and “staycation” motoring products are popular.

However, Halfords cautioned: “Supply challenges for cycling products remain acute and a return to normal trading patterns remains highly uncertain, particularly in H2, as the hospitality industry and international travel potentially reopen to a greater extent.

“The general economic outlook remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases.”

Halfords said that such factors, and price investment at its motoring arm, led it to target profits “of above £75m” in the new financial year.

Chief executive Graham Stapleton said: “We are delighted to have delivered a year of very strong financial and operational progress, especially in light of the extraordinary challenges presented by the pandemic.

“It was a year in which Halfords’ transformation into a service-led business was rapidly accelerated and we were particularly pleased to achieve a record revenue performance in the strategically important area of motoring services.

“We have also continued to lead the transition to an electric vehicle future by investing in training and technology.

“Demand for our services remains strong in the new financial year and our touring categories are currently performing particularly well given the trend towards staycations this summer.

“In the longer term, we remain confident in the future prospects for the UK’s motoring and cycling markets, and our ability to compete strongly in both.”