Halfords slows transformation plans as profits tumble

Halfords has reported lower annual profits, as the retailer warned that a transformation plan would take longer than expected amid current levels of consumer uncertainty.

Profit before tax dropped 24% to £51 million at the business, with lower motoring sales, high investment and weak sentiment in the run-up to Christmas all contributing to the decline.

Overall revenue was up 0.3% to just under £1.139 billion. On a like-for-like basis revenue climbed 1.1%.

The company has previously signalled that it would slam the brakes on profit growth in order to invest in its new customer-focused strategy.

But on Tuesday it said the plan would take longer to implement than initially thought, so that it can adjust to the weaker consumer confidence in the UK.

Chief executive Graham Stapleton said: “Since launching our new strategy, we have seen encouraging early progress.

“As we strengthen our unique services proposition, customers are responding positively, and we are particularly pleased that nearly a quarter of all Halfords sales are now service related.

“Consumer confidence remains fragile; however, we remain confident that the strength of our customer offer, our people, our strategy and clear focus on our medium-term financial targets leave us well-placed for long-term sustainable growth.”

Capital investment next year is now likely to be £35 million, below previous targets of between £40 million and £60 million.

Analysts at Liberum said the investment had set the company up well for the future.

“Halfords has been hit hard this year but this should not cloud the fact that a return to sustainable profit growth is on the horizon,” they said.

“We think the group will soon overcome the legacy of the past having invested heavily in the business over the past five years and with a bold, yet credible strategy under a new senior team, we think an inflection point is in sight.”