Halfords has called on the government to fast-track reforms to the apprenticeship levy, as it posted a mixed performance in its first-half results for 2024, with flat sales and continued cost pressures.
The motoring and cycling retailer reported its underlying pre-tax profit slipped 1.4% to £21.0m in the 26 weeks to 27 September as sales fell 1% to £864.8m.
Like-for-like sales were virtually flat at -0.1%, as growth in its Autocentres business helped offset a slight decline in retail performance.
Autocentres, which accounts for around 40% of the company’s sales, reported a solid 0.8% increase in like-for-like (LfL) sales. In contrast, its retail division saw a 0.7% drop in LfL sales, primarily due to ongoing weakness in the cycling market, which remains around 33% below pre-pandemic levels.
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Looking ahead, Halfords is accelerating its Fusion Motoring Services strategy, which seeks to create closer integration between its retail and Autocentres divisions. The company plans to expand the number of Fusion locations to around 40 by the end of FY25.
Along with the trading update, Halfords also highlighted significant challenges stemming from the recent UK Budget, which added £23m in direct labour costs, though the company said it has already accounted for most of these costs in its future planning.
Halfords CEO Graham Stapleton added: “The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.
“While we will work hard to mitigate these costs, we urge the government to consider alternative ways of supporting businesses like ours, including the acceleration of Apprenticeship Levy reform, which would help us to upskill existing colleagues and offset some of the new headwinds.”
The business also expressed concerns over the ongoing uncertainty in the UK economy adding that “the effect of the UK Budget on consumer behaviour and hence the trajectory of our end-markets is unclear.”
Halfords warned that while it remains confident about hitting its full-year targets there could be short-term costs, including temporary garage closures, to facilitate the Fusion rollout.
Stapleton said: “I am really pleased with the progress we have delivered in the first half. Against ongoing headwinds, we have continued to focus on controlling the controllable, with a disciplined approach to cost and margin optimisation.
“We are particularly excited by the outstanding results we are seeing from our Fusion Motoring Services programme, which creates a stronger connection between our retail stores and Autocentres in a town to fulfil all our customers’ motoring needs. Now live across 22 locations, these motoring services locations are delivering phenomenal returns with a significant uplift in both sales and profit. Given the strength of these results, we are now targeting 40 Fusion sites this year.
“Looking ahead, while the short-term outlook remains challenging, we will continue to build on our unique omnichannel platform and focus on what we can control to deliver on our strategy this year and beyond.”
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