Halfords reported a £38.3m drop in annual profits as the group was hit by a decline in consumer demand for cycling following its lockdown boom and a tough economic climate.
For the year, underlying profit before tax slumped to £51.5m compared to £89.8m the prior year and £56m during the pandemic as the retailer invested in keeping prices low for consumers amidst the cost of living crisis – including launching its ‘keep Motoring for less’ campaign and price reductions across motoring goods.
Underlying earnings before tax also fell -21.1 per cent to £186m as the cycling and auto services giant battled low high levels of economic uncertainty and ongoing consumer financial worries.
The group also said it saw over an estimated £68m of year-on-year inflation in FY23, and two of its core markets, consumer tyres and cycling, have seen significant volume decline, of 14 per cent and 24 per cent respectively, compared to during the pandemic.
During the year, Halfords announced a greater expansion of its motoring services, including a ‘one one-stop-shop’ for motoring ownership, to make the experience more convenient for consumers.
The group said it expects “strong profit growth” in FY25 as it take a step towards its mid-term expectation of £90-110m underlying PBT – largely due to the ramping up of ‘buy now pay later’ schemes and an expansion in the brakes market.
“In a very challenging year, our focus has been on supporting both customers and colleagues through the cost-of-living crisis,” Graham Stapleton, chief executive officer of Halfords, said.
“Investment in competitive pricing and the value for money offered by our Motoring Loyalty Club, has enabled us to help more people with their motoring needs. This has led to an outstanding sales performance and significant market share gains.”
He added: “Trading since the start of the new financial year has been strong. We have seen growth in our loyalty club, now reaching over 2m members, and we have entered the £1bn car parts market, drawing on our unrivalled value and convenience.
“Last week we launched an industry leading Buy Now Pay Later offer to help customers cover the cost of essential vehicle maintenance and repairs. All of this is of course delivered by our highly skilled colleagues, across our unique and convenient combination of garages, mobile vans and stores.”