Motoring and cycling specialist Halfords has made a “soft” start to its new financial year and reported a fall in annual profits.

Halfords autocentre

Halfords said its autocentres business was ‘the star performer’ again

Halfords said underlying pre-tax profit from continuing operations slid 7.9% to £43.1m last year, when it nevertheless made market share gains in its core categories, ”outperforming our expectations”. Sales climbed 7.9% to £1.69bn although retail was only up 2%.

The profit decline was in line with expectations. Halfords said tough trading conditions persist, and it expects volumes to fall or be flat in key product areas this year.

Halfords reported that trading in the current financial year is still being affected by ”low consumer confidence around big-ticket, discretionary purchases”, and poor spring weather has hit store footfall.

The retailer said inflation is still “a material headwind, particularly driven by the 10% increase in the national minimum wage” and there have recently been “very significant increases in sea freight rates” and it now expects freight costs to be £4m to £7m higher than anticipated at the start of the year.

Halfords chief executive Graham Stapleton said: “This has been a year of strong strategic and operational progress, and we are pleased to have delivered a resilient financial performance against challenging core markets.

“We have continued to invest in our strategically important services business, which for the first time now represents over half of our total revenues. Our autocentres business was the star performer yet again.

“While the short-term outlook remains challenging, we continue to build a unique, digitally-enabled, omnichannel business, which is well positioned for profitable growth.”