Halfords profits fall 23 per cent but sales rise in challenging environment

Halfords profits dropped 23 per cent in the first half of the year as it launched a new strategy but sales rose amid a "challenging" environment.

The figures

Halfords reported a pre-tax profit of £28.2m for the six months to 28 September – a 23 per cent drop on the same period in 2017.

Excluding one-off costs of a strategic review, which the company spent £2.3m on, underlying profit was down 17.1 per cent.

Group sales increased 1.9 per cent to £600m with motoring sales up 3.3 per cent and cycling up one per cent in terms of like-for-like sales.

Total operating costs also rose eight per cent to £211m due to a weak start to the cycling season, inflationary impact and investment in new stores.

The retailer said its good growth in sales of tools, dash cams and motoring services “more than offset” the continued market decline of sat-navs and in-car audio products.

Why it's interesting

Halfords announced its new strategy in September, which included raising investment in its network of stores and service outlets.

Despite the challenging retail environment, and in Halfords case the impact the bad weather at the start of the year had on cycling sales, the company has reported encouraging sales figures.

The results also come after a reported failed bid for rival firm Evans Cycles, which was scooped up by Mike Ashley's Sports Direct.

What Halfords said

Chief executive Graham Stapleton 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.

“We are moving to a more customer centric approach, leveraging our expertise to provide a more differentiated shopping experience and an integrated and more convenient services offer.”

What the analysts said

Kate Heseltine, analyst at Edison Investment Research, said: “Halfords reported a solid set of interims.

“One clear message is that services are very much at the heart of the business.

“A number of steps are being taken to enhance the service offer, including the integration of the Retail and Autocentres websites and roll out of mobile services vans.”