Halfords sees clear road ahead after sales rise but sterling loss dents profit

Halfords has insisted it will keep its foot on the gas despite posting lower annual profits.

Despite the currency headwinds, overall like-for-like sales grew 2%. Picture: Jakob Ebrey

The car parts and bicycle retailer booked a 6 per cent fall in full-year, pre-tax profit to £67.1 million while revenue during the 12 months to 30 March nudged up 3.7 per cent to £1.13 billion.

The group pointed to £25m in additional costs as a result of the weaker pound against the dollar following June 2016’s EU referendum outcome. Sterling’s decline following the Brexit decision has pushed up import prices for many retailers.

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Halfords has attempted to mitigate the impact through “supplier negotiations, operational efficiencies and pricing”.

Despite the currency headwinds, overall like-for-like sales grew 2 per cent, with retail motoring sales up 1.9 per cent and cycling up 2.9 per cent on a comparable basis. A proposed full-year dividend of 18.03p is up 3 per cent on the year before.

Chief executive Graham Stapleton told investors: “We are pleased with the full-year 2018 performance in a challenging retail environment, with profits in line with expectations.

“By focusing more on our specialisms and our services, ensuring that we always provide best value to our customers and presenting a more seamless and inspirational omni-channel experience, there is a really exciting future of growth ahead of us.”

The chain said it saw strong demand for bikes including electric models, as well as cycle repairs, with sales by number up despite recent price hikes. However, the extreme weather in March dented sales volumes.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “New man Graham Stapleton doesn’t provide a full update until September, but early signs suggest he’s opted for more of the same – investing in services and taking the hit on margins to keep prices low.

“Halfords has to compete with online rivals if it’s to be a success, and it’s the group’s ability to deliver face-to-face service and expertise that sets it apart. An increasingly skilled workforce means service related sales are rising, and long-term that should allow the group to charge a premium to online rivals.”

In a separate announcement, Halfords said it was appointing ex-British Airways boss Keith Williams as chairman, replacing Dennis Millard, who is retiring.

Williams said: “Halfords is a business with a great heritage and an exciting future, and I am delighted to be taking on the role of chairman.”