Retailer to cut costs as profits down sharply

Profits at Halfords slipped by nearly one-quarter last year as it blamed the mild winter and fragile consumer confidence for its financial performance.

The retailer will put “greater emphasis” on cutting costs and it hopes this will see profits immprove the year after next.

The current financial year is forecast to deliver pre-tax profits around the same level as the £51m generated in the year to March 29.

It is scaling back its capital investment plans for the year, down to £35m from the previously-guided range of £40m-£60m. This will mean delivery of its strategy is “likely to take longer than we expected”, it said.

Halfords chief executive Graham Stapleton, who took over in January 2018, 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.”

The Redditch-headquartered business increased like-for-like revenues by 1.1%, to £1.14bn, with its autocentres performing more strongly than its retail sales.

Halfords has recommended a 3% increase in the dividend. However investors will be more focused on the share price, which has fallen nearly 40% in the last year. It closed last night at 239p, valuing the company at £475m.