Halfords CEO calls for apprenticeship levy reform as sales drop 1% in H1

Halfords has called on the Government to reform the apprenticeship levy amid a 1% drop in revenues for the 26 weeks to 27 September 2024. Revenues for the retailer dropped to £864.8m in H1 FY25, compared to £873.5m in 2024. Autocentres, which accounts for 40% of total sales, reported a 0.8% increase in LfL sales to £348.7m. However, retail sales saw a small LfL reduction of 0.7% in the period to £516.1m, with motoring performing more strongly than cycling due to its higher mix of needs-based rather than discretionary products. During the period, the group delivered an underlying profit before tax (PBT) of £21m, broadly in line with the previous year. Looking ahead, Halfords believes that the second half of the year will be impacted by incremental freight at the lower end of the previously indicated £4m-7m range. The retailer also plans to extend the number of Fusion locations to around 40 by the end of the year. Graham Stapleton, chief executive officer of Halfords, 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.” In the trading announcement, the motoring retailer explained that the recent Employers’ National Insurance changes announced in the Autumn Budget have “materially impacted” its cost assumptions for FY26, adding £23m to its direct labour costs. The retailer expressed concerns over the “single-year cost increase of this magnitude” particularly in the Retail business where many of its product categories are discretionary. Stapleton said: “The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face. While we will work hard to mitigate these costs, we urge the government to consider alternative ways of supporting businesses like ours, including the acceleration of Apprenticeship Levy reform, which would help us to upskill existing colleagues and offset some of the new headwinds. “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.”