Halfords warns on profits in face of cost-of-living crisis

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Halfords has downgraded its profit expectations for the full year despite a rise in sales and profits.

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Halfords made three acquisitions over the year, including Axle Group, making it the UK’s largest motoring service provider

The retailer reported underlying profit before tax of £89.8m, up 57.8% on a two-year basis, in the 12 months to April 1.

Revenues also grew 19.9% on a two-year basis and 6% year on year to £1.37bn.

This was largely driven by an increase in market share in autocentres and motoring, up 91.9% and 6.5% respectively, while cycling also grew 2.7% despite supply chain disruption in the period.

Halfords made three acquisitions over the year, including Axle Group, making it the UK’s largest motoring service provider.

The specialist retailer, however, said it now expects FY23 underlying profit before tax to be within the range of £65m to £75m as it predicts a “level of uncertainty” looking forward.

Halfords added that it expects reduced demand, especially for higher-priced discretionary items.

Chief executive Graham Stapleton said: “The strength and resilience of this performance is a great illustration of Halfords’ transformation over the past two years. Our strategic shift towards motoring services has delivered higher, more predictable and more sustainable returns, and our acquisitions of both National and Iverson Tyres during the year mean that we are now the UK’s largest motoring service provider.

“Motoring now represents over 70% of Halfords’ total revenue, and the fact that our products and services in this category tend to be needs-based rather than discretionary will help us to navigate our way through the well-documented macroeconomic uncertainty that we are currently seeing.

“We are determined to do everything that we can to help our customers during the current cost-of-living crisis through initiatives such as our recently launched Motoring Loyalty Club and our second-hand bike exchange.

“We are continuing to play a key role in helping consumers to choose electric forms of transport and are constantly investing in the training and upskilling of our technicians in this critically important area. Sales of e-bikes, e-scooters and accessories were up 74% on two years ago, and servicing for electric cars in our garages was up 140% year on year.

“We have also rolled out free electric bike trials to encourage customers to make the switch and are the first mainstream retailer to offer an end-to-end EV charging solution for the home.

“While rising inflation and declining consumer confidence will naturally present short-term challenges for any customer-facing business like ours, we remain confident in Halfords’ long-term growth prospects due to our service-led strategy and the enduring strength of our brand, people, products and services.”