Cycling and motoring retailer Halfords has announced its plans to launch a new growth strategy following a significant dip in its half-year profits.
Following on from its three year “Getting into Gear” campaign, the retailer is now initiating a new venture called “Moving Up a Gear”.
In the height of the summer period, all retail categories including motoring performed well expect for cycling. The chain’s new Chief Executive Jill McDonald claimed that the weather had negatively affected the retailer’s results. Profits before tax for the 26 weeks to 2 October fell 6.5% from £49.6m to £46.4m.
Halfords has said that its new strategy will follow five key “pillars” which include: focusing on customer service, investing in customer data and insight, increasing the number of exclusive products, partnerships and innovations, developing a seamless experience for customers online and in-store and “moving from fixing the basics to improving efficiency and fulfillment”.
The retailer’s new plan is the outcome of missed expectations in its first half. Like-for-likes were up 1.7%, largely below consensus and down from 7% in the same period last year.
"In the first half the motoring side of the business performed well and in-store service sales grew strongly, reflecting our focus on this key area of differentiation. The cycling performance in the second quarter was disappointing and, given the seasonal mix towards cycling during the summer, this contributed to the decline in group profitability for the period. Looking forward, there are plenty of reasons for us to remain confident that the cycling market will continue to grow over the long-term.” McDonald said.
After three years of investing to stabilise the foundations, improve service levels and grow sales, Halfords is now a fundamentally strong business, operating in markets with good growth prospects. However the modernisation process is not yet complete. Under the new strategy we will continue to invest to move from fixing the basics to enabling sustainable growth” she added.
There are a number of significant opportunities for further improvement, which include the leveraging of customer data and analytics, relentless innovation, a better shopping experience, enhanced customer service and services, and a fulfilment infrastructure for modern times.
We look forward with confidence to growing Halfords over the long term."
With the focus of the business now in place, Halfords anticipates flat profit for 2016 and 2017 and growth from then on.