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Halfords half-year profits down 20.4%


Automotive and leisure products retailer Halfords saw group profits fall 20.4 per cent to £54.7 million in the 26 weeks to September 30th 2011, as motorists held back on spending in light of rising fuel and insurance costs.

In an interim results statement for the first half of its financial year, the business said that sales of car maintenance products had suffered in light of recent economic pressures on consumers, but cycling revenues have been positive.

Halfords’ retail arm as a whole generated sales of £400.6 million in H1, which was down 1.6 per cent year-on-year, while it Autocentres business saw revenues rise nine per cent to £53.4 million, resulting in total group sales decline of 0.5 per cent.

New cycling products such as the latest Carrera range have helped the retailer push sales comparisons in the right direction, with the retail division’s like-for-like (LFL) trading down 1.9 per cent on last year, compared to -4.9 per cent LFLs at the same stage in 2010.

The company also highlighted its new in-store customer initiatives, including tech services such as Wefit, as key drivers of sales during the six months of trading.

Halfords has also conducted extensive customer research with Emphatica in recent months, which has culminated in the shopper insight firm undertaking a customer experience programme across the retailer’s entire store portfolio to identify where it must improve and what consumers are looking for.

David Wild, CEO of Halfords, called the business’s performance “robust” in what has become an increasingly challenging climate for the retail industry.

“Our new marketing campaign, ”that’s helpful, that’s Halfords” has built awareness of our unique value offer to customers, which blends good prices, quality and innovative products with the expert service of our colleagues in each category in which we operate,” he explained.

And although sales of car maintenance and enhancement products fell 3.1 and 9.8 per cent respectively in H1, Wild is happy with the company’s leisure offering.

“Within stores we have been encouraged with the customer response to our innovations in cycling, where we have grown sales in premium, mainstream, children’s bikes and accessories,” he added.

Today’s statement indicated that full-year management guidance on retail gross margin and operating costs remains unchanged, as retail gross margin fell 105 base points (bps) to 52.7 per cent wiping out Autocentres 36 bps rise.

Wild said: “The strength of our balance sheet and our cash generation mean that we are maintaining our interim dividend whilst continuing to return cash to shareholders through our share buyback programme.

“It is impossible to predict when trading conditions will ease. Despite this we are continuing to invest in value for customers, creating the right platform for long-term sustainable growth.”

Published on Thursday 10 November by Editorial Assistant

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