Halfords full-year profits plunge 17.9%

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Halfords profits
// Halfords posts 17.9% drop in full-year underlying pre-tax profit to £58.8m
// Bicycle, camping and autocentre retailer to cut costs in 2020 to boost profit
// However, total like-for-like sales up 1.1% and retail sales up 0.8%

Halfords has reported a double-digit drop in full-year profit and forecast a flat outcome in its new financial year, prompting it to announce a cost-cutting strategy.

For the financial year ending March 29, the bicycle, camping gear and car parts retailer posted a 17.9 per cent drop in underlying pre-tax profit to £58.8 million.

However, total group revenue went up by 1.1 per cent on a like-for-like basis to £1.1 billion, with retail sales up 0.8 per cent and autocentre sales up 2.6 per cent.

While mild winter temperatures boosted cycling sales by 2.6 per cent on a like-for-like basis, motoring sales slid by 0.4 per cent on a like-for-like basis.

Halfords attributed its drop in profits to the lower motoring sales mix, which was also impacted by subdued consumer confidence in the lead-up to Christmas, retail cost inflation and investment in strategic projects.

As a result, the retailer said it would cut costs and reduce capital expenditure in 2020 to help improve profit as a challenging retail market continues to weigh on its performance.

It comes after chief executive Graham Stapleton, who was appointed to the helm in September, announced a strategy to become “a truly differentiated, service-led super specialist” retailer.

Looking ahead for 2020 though, Halfords said continued to expect flat pre-tax profit, assuming weather conditions and an economic outlook would be similar to what was experienced in the second half of 2019.

“The current economic environment and consumer confidence continues to remain challenging,” Halfords said.

“As a business we are continuing therefore to put greater emphasis on improving our cost base and maximising efficiencies across the group.”

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