Halfords slashes dividend as profits tumble 22%

Car parts and cycles retailer Halfords has unveiled a three-year strategy to boost its sales after unveiling a 22 per cent plunge in annual profits.

The group also proposed a 35 per cent reduction in its final dividend to 9.1p a share to fund the overhaul and maintain a “robust balance sheet”.

Chief executive Matt Davis said the strategy will involve about £100m of investment in the firm’s retail offering in a bid to grow sales to £1 billion by 2016.

He added: “This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities.

“We expect these vital investments will reduce short-term retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value.”

Pre-tax profits before one-off items fell to £72 million in the year to 29 March, down from £92.2m a year earlier, as total revenues edged up 1 per cent to £871.3m.

Halfords, which employs about 12,000 people, experienced a varied year as bicycle sales were initially hit by poor weather, before being lifted by the “Wiggins effect” of Britain’s Tour de France and Olympics success, while sales of de-icer and screenwash kept tills ringing during the winter.

Cantor Fitzgerald analyst Kate Calvert said the plans were “well overdue” but she forecast that profits in the current year would fall to between £58m and £60m because of an increase in operating costs.