Halfords Group PLC on Tuesday said it was able to mitigate headwinds in the Autocentres servicing business, as it posted a rosy outlook despite a profit dive.
The Birmingham-based cycle and motor repair company said pretax profit fell 23% to £17.8 million in the financial half-year ended September 27, from £23.2 million a year ago.
Revenue ticked down 1.0% to £864.8 million from £873.5 million.
Halfords declared an interim dividend of 3.0p pence per share, unchanged from a year prior.
Chief Executive Officer Graham Stapleton said: ‘I am really pleased with the progress we have delivered in the first half. Against ongoing headwinds, we have continued to focus on controlling the controllables, with a disciplined approach to cost and margin optimisation. We are particularly excited by the outstanding results we are seeing from our Fusion Motoring Services programme, which creates a stronger connection between our Retail stores and Autocentres in a town to fulfil all our customers‘ motoring needs. Now live across 22 locations, these motoring services locations are delivering phenomenal returns with a significant uplift in both sales and profit. Given the strength of these results, we are now targeting 40 Fusion sites this year.’
Halfords said it remains ‘comfortable with consensus estimates for FY25’.
‘The second half of the year will be impacted by incremental freight at the lower end of the previously indicated £4-7 million range, and acceleration of our Fusion rollout will have a [roughly] £1 million impact due to temporary garage closures,’ it adds.
The firm said measures announced in the UK budget will add £23 million of direct labour costs, of which £9 million was already included in its ‘planning assumptions’ for the next financial year.
‘The effect of the UK budget on consumer behaviour and hence the trajectory of our end-markets is unclear. We have a greater ability to mitigate headwinds in the more needs-based Autocentres servicing business, where pricing power is greater. Additional tactical and structural options to support mitigation are under review,’ Halfords continued.
CEO Stapleton said: ‘Looking ahead, while the short-term outlook remains challenging, we will continue to build on our unique omnichannel platform and focus on what we can control to deliver on our strategy this year and beyond.’
The company’s last financial year ended on March 29.
Halfords shares rose 11% to 143.80 pence each on Tuesday afternoon in London.
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