Halfords profits down despite strong retail performance

Pre-tax profits shrank 9.8% to £36.6m in the 26 weeks to September 29.

Like-for-likes climbed 1.5% as total sales rose 3.8% to £558.7m.

Halfords is currently being run by interim boss and chief financial officer Jonny Mason.

Mason will soon be replaced by Graham Stapleton, who will join the business in January from Dixons Carphone, taking over from former chief executive Jill McDonald, who now heads up clothing and home at M&S.

Mason said that Stapleton’s experience “in digital services and commercial strategy” made him a good fit for the role and that he would ”continue to deliver on Halfords existing strategy”.

The retailer’s profits and margins were hurt by ongoing currency fluctuations, which Mason said will cost the retailer £25m over the course of the current financial year.

However, Mason said he was confident that if the value of the pound held steady at its current rate the impact on Halfords profits would “tail off significantly” in the next financial year.

Halfords’ sales rise was driven by its retail division, where like-for-likes inched up 1.9% and total sales increased 4.5%.

In its autocentres division, like-for-likes fell 1.3% while total sales decreased 0.6%.

“We have strong plans both in-store and online for the cyber, Christmas and winter peaks”

Jonny Mason, Halfords

Halford’s retail performance was driven, as usual, by rises in its healthy cycling and services departments.

Cycling like-for-likes were up 2% as total sales climbed 7%.

Halfords is focused on growing its services division, tapping into the trend for consumer spending on experience rather than product.

It launched new types of services during the period, with sales swelling 19.3% as around two million in-store bike fittings and repairs were performed.

This combination of needs-based and strong discretionary spend means that Mason is confident about Halfords Black Friday and Christmas trading, despite October’s dismal wider retail sector sales.

“The BRC data was in areas that aren’t really related to what we do so it hasn’t caused us to feel nervous,” said Mason.

”We’ve got great plans ahead for Black Friday and Christmas and as we go into this golden quarter we feel ready to sell well.”

Mason said: “It is pleasing to report positive sales growth for this period, despite the poorer summer weather and the uncertainty in the UK economy.

“We are also pleased with our profit performance in the half, as we offset a large part of the circa £15m increase in costs that resulted from the impact of the weaker pound.

“Looking ahead, we have strong plans both in-store and online for the cyber, Christmas and winter peaks.”