Halfords gets in gear with garage deal as profits stumble
The chain posted a 15% fall in underlying profits to £25.9m for the six months to September 27.
Halfords has unveiled a deal to boost its Autocentres business under plans to renew its focus on motoring after tough retail conditions sent sales and profits falling.
The car parts-to-bicycles chain has snapped up Scottish garage chain McConechy’s Tyre Service for £8.5 million cash under aims to double the contribution of service-related sales to group revenues.
It came as the group revealed the impact of a difficult consumer environment, with underlying profits tumbling 15% to £25.9 million after like-for-like retail sales dropped 3.1% in the six months to September 27.
Statutory pre-tax profits were 2.5% lower at £27.5 million.
The firm revealed that demand for so-called big ticket items, such as more expensive bikes, were the hardest hit.
Over the medium term, we expect service-related sales to double as a percentage of group sales and Autocentres to represent a materially larger proportion of Halfords' profits Graham Stapleton, Halfords
Overall, bike sales lifted 0.2% thanks to a better-than-expected performance in the final six weeks amid strong demand for electric cycles and children’s models.
Its Autocentres car maintenance arm was once again the bright spot, with comparable sales ahead 2.1%.
Halfords chief executive Graham Stapleton said retail sales were hit by weakened consumer confidence, but put faith in his plan to grow its services, online and business-to-business offerings.
He added: “Over the medium term, we expect service-related sales to double as a percentage of group sales and Autocentres to represent a materially larger proportion of Halfords’ profits.
“As a result, motoring will inevitably grow in focus for the group.
“We are confident that this strategy will drive long-term sustainable growth.”
Mr Stapleton unveiled his overhaul a year ago, with aims to increase Halford’s services footprint to more than 1,200 sites, including 550 garages and 200 mobile vans.
The latest acquisition will see it add 60 garage sites and 100 vans across Scotland and the North of England.
Halfords also recently bought mobile chain Tyres On The Drive.
But Halfords warned that the plans will see it ramp up spending by around £11 million on top of the £35 million expected for 2019-20.
Analyst Adam Tomlinson, at Liberum, said the half-year figures were “reassuring”.
He added that the McConechy’s takeover offers “good synergies”.