Halfords goes into reverse with profit slump in fiscal 2024
Halfords, headquartered in Worcestershire, said trading continued to be difficult into fiscal 2025 as low consumer demand, inflation, and the poor spring weather weigh on the cycling and motor parts firm.
Reporting its full year results for fiscal 2024 (to March 29), which saw underlying pre-tax profit drop over 18%, the group said store footfall into fiscal 2025 was down and sales of both cycling and staycation products had been affected.
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"Whilst we continue to expect market share gains in the year ahead, based on what we are currently seeing we now expect market volumes to decline in FY25 in cycling and consumer tyres, and to remain broadly flat in motoring servicing and retail motoring products," it said.
"Inflation remains a material headwind, particularly driven by the 10% increase in the national minimum wage," Halfords added.
For FY24, the company reported that its underlying pre-tax profit fell 18.3% to £36.1 million (FY23: £44.2 million) on revenue of £1.7 billion, up from £1.6 billion in FY23.
Halfords added that it had recently seen "very significant increases in sea freight rates" and while it continued to "successfully secure rates well below market spot rates", it now forecast freight costs to be £4-7m higher than it anticipated at the start of the year.
CEO of Halfords said fiscal 2024 had seen "strong strategic and operational progress" and the company had delivered a "resilient financial performance against challenging core markets".
"We have continued to invest in our strategically important Services business, which for the first time now represents over half of our total revenues," he added.
"While the short-term outlook remains challenging, we continue to build a unique, digitally-enabled, omni-channel business, which is well positioned for profitable growth."
Charlie Huggins, manager of the quality shares portfolio at Wealth Club, noted that the Halfords full-year numbers had shown growth had gone into reverse.
"Unfortunately, the outlook for 2025 doesn't look much better. Halfords has continued to see caution from its customers, and inflation remains a problem, with both freight and wages rising strongly," he said.
"Consumer confidence is clearly being impacted by cost of living pressures. But this isn't the full story. The post-pandemic cycling boom is unwinding. In addition, competition is fierce and increased promotional activity, especially in cycling, has clearly hit Halfords hard and put pressure on margins.
"Overall, Halfords is in a tough spot. It is rightly focusing on what it can control - like cutting costs. But unfortunately, there is a lot that is out of its hands," he added.
