Halfords launches battle plan after alarming profit slump
HALFORDS Group is aiming to address a sharp dip in profits through its new Getting into Gear 2016 campaign, which is intended to radically revamp its retail offer.
The Redditch-based automotive and leisure products retailer – and operator in garage servicing and auto repair – saw a 21.9% fall in profit before tax for the year to March 29, from £92.2m to £70m.
Its preliminary results for the 52 week period show a slight increase in total group revenue (1% from £863.1m to £871.3m). However, the Autocentres operation contributed a 13.5% revenue increase whereas retail revenue was actually down by 0.9%.
The figures will be worrying for Halfords, particularly given that the period covers the London Olympics which – with so many UK wins – might have been expected to lead to a surge in cycle sales.
Chief Executive Matt Davies said: “Halfords Retail sales performance in FY13 reflected a demanding trading environment and demonstrated how we can exploit our offer with investment and by focusing on areas of opportunity.
“The Autocentres performance was satisfactory against a backdrop of a declining market and particular challenges in the fleet sector. The fall in group profitability however illustrates the pressing need for sustainable revenue growth to offset on-going cost inflation.
“Today I am announcing our Getting Into Gear 2016 plan, designed to significantly improve our retail customer experience and bring about sustainable and profitable sales-growth momentum.
“This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities.
“We expect these vital investments will inevitably reduce short-term retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value.”
The firm said the three-year retail plan contains the following five elements:
– Service Revolution: a step change in customer service
– The H Factor: reasserting Halfords authoritative category propositions
– Stores Fit To Shop: upgrading the Halfords store estate
– 21st Century Infrastructure: developing necessary IT and supply-chain capabilities
– Click With The Digital Future: creating a service-led digital proposition
The plan includes around £100m of retail capital investment over three years, underpinned by a significant increase in both operating costs and stock.
The group is targeting sales of £1bn in FY16.
