Halfords has reported a drop in full year profits as it continues to take a beating from the depreciated sterling.
In the year to March 30, the retailer posted a revenue rise of 3.7 per cent to £1.13 billion, while like-for-like sales across both its cycling and motoring arms grew two per cent overall.
Despite the rising sales, Halfords was lumped with an additional £25 million in costs thanks to the weakened pound, resulting in a six per cent fall in pre-tax profits to £67.1 million.
“We are pleased with the full-year 2018 performance in a challenging retail environment, with profits in line with expectations,” chief executive Graham Stapleton said.
“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.”
Hargreaves Lansdown’s equity analyst Nicholas Hyett added that although share prices took a hit on the news this morning, there is still optimism about the retailer’s prospects.
“The extra cost and lack of margin recovery has taken the market by surprise, knocking the shares this morning, but long-term we still think it’s the right approach,” he said.
“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.
“The fact that 85 per cent of Halfords’ growing online sales are being picked up in store bodes well, with online sales complementing physical stores rather than cannibalising them.”