Earnings impacted despite first half sales rise for Halfords
FIRST half sales rose 6.3% for Worcestershire retailer Halfords, with gross profits up 1.5%, the company has said.
Group sales in H1 were £567.3m but total operating costs rose by 4.5% reflecting investments, the National Living Wage and the first-time inclusion of the operating expenditure in respect of acquisitions Tredz and Wheelies.
This impacted earnings, which earnings before finance costs, tax and non-recurring items (EBIT) were £41.8m, which compares with £47.9m in the prior period.
Earnings before non-recurring items, finance costs, depreciation and amortisation (“EBITDA”) were down 8.3% to £57.1m.
The increase in the cost of goods associated with the depreciation in sterling was c.£6m, which was more than the year on year reduction in profit. Pre-tax profit was £40.8m and earnings per share before non-recurring items were 16.6p, down 12.1% and 13.5% respectively.
Jill McDonald, chief executive, Halfords, said: “The first half sales performance was strong, improving through the period, with growth across all areas of our business. Our service-led offer is a key point of difference for Halfords and continued investment in this area has led to good progress in service-related sales.
“I’m pleased with the momentum that is building as we implement our strategy. There is demonstrable progress across the plan, with more to come in the year ahead, and the benefits for colleagues and customers are starting to come through.”
She recognised that the depreciation of sterling brought cost headwinds, however, she said the Redditch-based retailer had developed a number of initiatives to mitigate the profit impact and remained confident in the underlying performance of the group.
