Halfords: Profit slides as cycling and motoring retailer warns of ‘soft’ trading

Halfords has reported a slide in profit as the cycling and motoring retailer cut its dividend and warned of “soft” trading for the current financial year.

The company reported a statutory pretax profit of £19.9m for the 12 months to 29 March 2024, down 45 per cent from £36.2m the previous year. On an underlying basis, pretax profit came in 18 per cent lower at £36.1m.

The latter figure was in line with a profit warning from the firm in February that foretasted a range of £35m to £40m, down from £48m to £53m.

Following the payment of an interim dividend of 3p per share in January, Halfords proposed a final dividend for the year of 5p per share, down from 7p in 2023.

Halfords said its performance reflected “worse than anticipated” headwinds outside of its control, including a decline in market volumes in cycling and consumer tyres – down roughly 30 per cent and 14 per cent respectively.

The firm added that trading in the new financial year had “continued to be soft” amid low consumer confidence on big-ticket, discretionary purchases, as well as poor spring weather, which had lowered store footfall and affected sales of cycling and staycation products.

It now expects cycling and consumer tyres volumes to decline in the 2025 financial year, with volumes remaining “broadly flat” in motoring servicing and retail motoring.

Although Halford’s revenue rose eight per cent to £1.7bn, its cost base rose by around £37m over the period on the back of continued elevated cost inflation. Halfords said its cumulative cost inflation was around £120m over the last three years.

Halford’s now forecasts freight costs to be £4m to £7m higher than anticipated at the start of the year, with it blaming a 10 per cent inrease in the national minimum wage for further inflationary pressures.

“Against this backdrop, we continue to focus on optimising the platform we have built, and controlling what we can. As such, we plan for proportionately fewer resources to be allocated to strategic transformation,” the company added.

Halfords said it did not expect the headwinds “to persist in the long term”, with inflation easing and its core markets are expected to improve in the medium term.

“This has been a year of strong strategic and operational progress for Halfords, and we are pleased to have delivered a resilient financial performance against challenging core markets,” said chief executive Graham Stapleton.

“While the short-term outlook remains challenging, we continue to build a unique, digitally-enabled, omni-channel business, which is well positioned for profitable growth.”