The recent financial update from Halfords highlights several key issues and opportunities for the company.
- Halfords reports a mixed financial performance for the first half of 2024 with revenue slightly declining.
- The company emphasizes challenges due to increased labor costs from the recent UK Budget.
- Halfords plans to expand its Fusion Motoring Services strategy, enhancing integration between divisions.
- CEO Graham Stapleton calls for government action on the Apprenticeship Levy to alleviate cost pressures.
In its financial report for the first half of 2024, Halfords demonstrated a stable yet challenging performance. The company’s group revenue reached £864.8 million, marking a slight decline of 1.0% compared to the previous year. Despite flat sales overall, performance varied across different divisions. The Autocentres division recorded a modest increase in like-for-like (LfL) sales at 0.8%, helping to balance a 0.7% drop in the retail segment. This decline in retail sales is primarily attributed to ongoing struggles within the cycling market, which remains impacted by conditions that predate the pandemic.
Halfords has seen a significant improvement in its financial standing with a net cash position of £1.3 million, a notable turnaround from last year’s net debt of £47.0 million. Underlying profit before tax remained steady at £21.0 million, reflecting the company’s efforts to optimize costs and maintain margins amidst economic pressures.
The company is pushing forward with its Fusion Motoring Services strategy, aiming to strengthen the synergy between its retail stores and Autocentres. Currently operational in 22 locations, the Fusion program has delivered impressive returns, encouraging Halfords to target 40 sites by the end of the financial year 2025. However, the rollout might introduce short-term challenges, including potential temporary closures of some garages as the integration progresses.
Halfords CEO, Graham Stapleton, highlighted the impact of the recent UK Budget on the company, stating that it introduced £23 million in direct labor costs. Stapleton expressed concerns over the clarity of the UK’s economic direction, which complicates market predictions. He urged the government to consider reforming the Apprenticeship Levy to support businesses like Halfords, which are heavily reliant on skilled labor. He stated, “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.”
Despite economic uncertainties, Halfords remains focused on strategic growth and cost management to navigate the challenges ahead.
