Halfords has brought a fresh reality check to Britain’s embattled retail sector after its half-year profits went into reverse.
The car parts and bicycles chain said consumers were holding back on spending on discretionary items, which had dented bike sales in particular. It posted a 23 per cent slide in half-year pre-tax profits to £28.2 million and said it expected the “short-term conditions for discretionary spend to remain challenging”.
On an underlying basis, pre-tax profits fell 17.1 per cent to £30.5m in the six months to 28 September.
The group said it remained on course for “broadly” flat full-year profits as it expects a pick-up in earnings over the final six months. But it stressed this was dependent on trading over the crucial festive period and assuming average winter weather.
Graham Stapleton, the firm’s recently appointed chief executive, said: “Despite the challenging UK consumer environment, we delivered a robust sales and cash-flow performance in the first half, with costs and profit broadly in line with our expectations.”
Like-for-like retail sales rose 2.3 per cent, while the group’s autocentres chain saw growth of 3.3 per cent. Bike sales crept up 1 per cent in the half-year as the heatwave offset a difficult start to the year.
Analysts at brokerage Peel Hunt noted: “A solid second half is required to get Halfords to its targets.”
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, added: “Profit before tax might look like Halfords has a flat tyre but half-year numbers are actually pretty stable.
“The group’s spending a lot on restructuring, but the bottom line is still in good health. Investors hold their breath when looking at retailer results these days, but all the signs are that Halfords will deliver on its transformation plans.
“All in, Halfords looks well oiled. Time will tell if its evolutionary efforts will fully pay off, but it looks like it’s on the right road for now.”