Tuesday 21 May 2019 8:40 am

Profit falls steeply at Halfords in face of ‘fragile’ consumer confidence

Halfords said profit before tax fell 24 per cent in 2019 to £51m.

The figures

The company said revenue remained broadly flat on £1.138bn, but profit fell sharply.

It said underlying profit before tax fell 17.9 per cent to £58.8m, with underlying basic earnings per share down 17.2 per cent on 24.5p.

Read more: Halfords share price crashes on profit warning

Why it's interesting

In September Halfords said it does not expect profit to increase until 2021 as it looks to invest in its stores and its online service.

Halfords' share price has had a rocky ride over the last year, with a profit warning last May, and a further profit warning in January after Christmas trading did not live up to expectations.

Last year the company held rescue talks with struggling bike chain Evans Cycles, which was ultimately bought out of administration by Sports Direct.

The company said that the economic environment and consumer confidence remains challenging. It said it was therefore putting a greater emphasis on improving its cost base and maximising efficiencies.

It said it hoped this would lead to profit growth in the 2021 financial year, but said the delivery of its plan was taking longer than expected.

Analysts at Liberum said: "Halfords has been hit hard this year but this should not cloud the fact that a return to sustainable profit growth is on the horizon. We think the group will soon overcome the legacy of the past having invested heavily in the business over the past five years and with a bold, yet credible strategy under a new senior team, we think an inflection point is in sight."

Read more: Halfords profits fall but sales remain robust in challenging environment

What the company said

Chief executive Graham Stapleton said: "​Consumer confidence remains fragile; however, we remain confident that the strength of our customer offer, our people, our strategy and clear focus on our medium-term financial targets leave us well-placed for long-term sustainable growth."