Halfords to accelerate strategic investment plan in strong divisions
Retailer Halfords says it’s on track to secure £30m in operational savings this year, whilst it looks to make strategic investments in its stronger divisions.
Whilst trading has been challenging amidst the current macro environment, Halfords has reported revenue growth of 13.9% alongside a sales increase of 8.3% and has saved £16.6m in the six months to September.
It’s strength currently lies within its B2B business, which has grown by 37% and represents nearly a third of group revenue. The Autocentre division has also delivered an uplift in underlying EBIT of £14.1m in the first half to £10.9m, surpassing EBIT for the whole of FY23.
Due to this growth, Halfords will be boosting its capital investment in the garage services operating model and customer experience in ten towns in the balance of this financial year.
However markets such as cycling are well below expectations due to the cost of living crisis, leading to difficulties in predicting whether recent trends will continue.
Halfords is going on the basis that trading conditions will reflect what has been experienced in the year to date and is therefore anticipating that its underlying profit before tax will fall within a narrower range of £48m to £53m.
With its tyre manufacturer partners, Halfords says it has a strong pipeline of target fleet tyre service customers and are already working with the likes of DHL, DPD, Evri and Kuehne & Nagel. Recent contract wins include Dudley, Coventry, Liverpool and Cheshire West councils, together with West Midlands Fire Service, Shropshire Fire and Rescue and the Ministry of Defence.
The retailer recently saw Bridgestone acquire a 5% stake in its SaaS subsidiary for £3m, as well as becoming one of its clients.
Avayler was developed in-house by Halfords in 2021 to manage services across garages, mobile vans and retail stores and will now be used by Bridgestone for the next 15 years.
Graham Stapleton, Chief Executive Officer: “Despite the challenging and volatile trading environment and slower than expected recovery in some of our markets, we have made a good start to the year, with substantial sales and profit growth, and increased market share across the business. At the same time, we supported our customers through the ongoing cost of living crisis by delivering great value – when they need it most.
“In the face of continuing economic uncertainty, we remain fully focused on optimising every element of the business, and I’m particularly pleased with the very strong performance of Autocentres, where we are delivering significantly improved returns”.