Halfords sees profits plummet and warns of trading problems

Car parts to bicycle retailer Halfords has revealed falling annual profits and warned that the trade remains under pressure from falling demand for bicycles.

The group reported an 18.3% fall in underlying pre-tax profits to £36.1 million for the year to March 29, including its tire supply chain business, which it divested as part of an outsourcing deal.

On a statutory basis, pre-tax profits fell 45% to £19.9m.

The chain saw comparable bicycle sales fall 2.8%, although the wider group saw 5% growth thanks to better trading at the Autocentres arm, where sales rose 10.7%.

According to the report, consumers have cut back “even further” on non-essential items such as bicycles and touring products, as well as tires, and this is expected to continue throughout the new financial year.

Halfords said trading has “remained soft” since late March, affected by low consumer confidence for major discretionary purchases, as well as poor spring weather which “reduced store footfall and affected sales of both cycling and staycation products”.

It expects sales in the bicycle and consumer tire markets to continue to decline by volume through 2024-2025 and to remain broadly flat in automotive service and retail automotive products.

The group also said it had been impacted by high inflation over the past year, with costs rising by around £37 million, bringing total cost inflation over the past three years to around £120 million.

Chief executive Graham Stapleton said: “The Autocentres business was once again the best performer – this was delivered despite a challenging tire market, where drivers continue to delay replacing unsafe tires.”

He added that the “near-term outlook remains challenging” but that the group was “committed to improving tire safety in Britain, and we are equally committed to supporting our customers through the cost of tire crisis.” subsistence”.

Halfords said it had resorted to promotions to boost bike sales, increasing this activity by 33% in the second half.

It also says more and more customers are buying cycling products on credit, impacting the company’s margins.