Halfords has reported a 17.9% drop in annual profits and has warned that “fragile” consumer confidence means it expects a flat outcome in its new financial year.
The car parts and bicycle retailer announced its preliminary results for the 52 weeks ended 29 March 2019 that profit before tax was £58.8m down from £71.6m the previous year.
This is despite total group revenue having increased by 1.1% like-for-like to £1.13bn off the back of a 0.8% increase in retail and a 2.6% rise in autocar sales. Halfords said that retail performance was impacted by “extremely mild winter temperatures”, boosting cycling performance, up 2.6% LFL, but adversely affecting Motoring which, as a result, was down 0.4% on a LFL basis.
Halfords added the £12.8m reduction in underlying profit before tax was driven by lower motoring sales mix year-on-year, due to “mild winter temperatures, weakened consumer confidence in the run up to Christmas, retail inflation and investment in strategic projects”.
Graham Stapleton, CEO, said: “Halfords Group has delivered sales and free cash flow growth in what remains a challenging UK consumer environment. While motoring continued to be impacted by extremely mild weather conditions, we are pleased to have seen continued and sustained growth in cycling, underpinned by improvement in our exclusive own brand ranges.
“Autocentres continued to perform well throughout the year, with strong sales growth, margin improvement year-on-year and good cost control. This focus led to a second year of profit growth within the business.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.”
He added: “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.”
Halfords also anticipates FY20 profit before tax to be broadly in line with FY19 assuming average weather conditions across the year and a consumer and economic outlook are in line with that experienced during the second half of FY19.