Profits tumble at Halfords cautions over trading woes

The group reported an 18.3% drop in underlying pre-tax profits to £36.1 million for the year to March 29, which includes its tyre supply chain business, which it has offloaded as part of an outsourcing deal.

On a statutory basis, pre-tax profits tumbled 45% to £19.9 million.

The chain saw like-for-like cycling sales drop 2.8%, although the wider group saw growth of 5% thanks to better trading at its Autocentres arm, where sales jumped 10.7%.

It said consumers slashed spending “even further” on non-essential big ticket items such as bikes and touring products, as well as tyres, and this is expected to continue throughout the new financial year.

Halfords said trading since the end of March has “continued to be soft”, impacted by low consumer confidence for big discretionary purchases, as well as the poor spring weather which “reduced store footfall and affected sales of both cycling and staycation products”.

It expects cycling and consumer tyres market sales by volumes to continue to fall over 2024-25 and to remain broadly flat in motoring servicing and retail motoring products.

The group also said it was impacted by high inflation over the year, with costs rising by around £37 million, bringing its total cost inflation to about £120 million in the past three years.

Chief executive Graham Stapleton said: “The Autocentres business was the star performer yet again – this was delivered despite a challenging tyre market, where drivers continue to delay the replacement of unsafe tyres.”

He added that the “short-term outlook remains challenging” but the group was “determined to improve tyre safety in the UK, and we are equally committed to supporting our customers through the cost-of-living crisis”.

Halfords said it had resorted to promotions to boost cycling sales, ramping this activity up by 33% in the second half.

It also said more customers are purchasing cycling products on credit, affecting the firm’s margins.