Halfords CEO urges the government for quick reform of the apprenticeship levy amidst stagnant sales and profits.
- Halfords reports a 1.4% drop in underlying pre-tax profit to £21.0m during the 26-week period to 27 September.
- Sales and profits are affected by an uncertain UK economy and increased labour costs due to the recent budget.
- The Autocentres division shows slight growth, while retail experiences a decline in like-for-like sales.
- Halfords continues to focus on its Fusion Motoring Services strategy, planning to expand its locations to 40 by the end of FY25.
The CEO of Halfords is advocating for swift reforms to the apprenticeship levy to combat stagnant sales and profits. Halfords, a well-known retailer in the motoring and cycling industry, has reported a mixed performance in the first half of 2024. The company’s underlying pre-tax profit fell by 1.4% to £21.0 million over a 26-week period ending 27 September, as its sales decreased by 1% to £864.8 million.
The company faces significant cost pressures from the recent UK Budget, which has added £23 million in direct labour costs. Despite these challenges, Halfords has largely accounted for these costs in its planning. The CEO expressed the need for government action to support businesses like Halfords, specifically through apprenticeship levy reforms. He noted that these reforms would aid in upskilling current employees, potentially offsetting these new financial burdens.
The Autocentres division, which contributes to 40% of Halfords’ sales, has shown resilience with a 0.8% increase in like-for-like sales. This growth has helped balance out a 0.7% decline in the retail sector, largely attributed to a persistent downturn in the cycling market, which is still 33% below pre-pandemic levels. The CEO remains optimistic about achieving full-year targets, despite potential short-term disruptions, including temporary garage closures as part of the Fusion Motoring Services expansion.
The Fusion Motoring Services programme is central to Halfords’ strategy, aiming to integrate its retail and Autocentres outlets more closely. The company has already established 22 Fusion locations and plans to expand this to 40 by the end of the fiscal year. The CEO commented on the impressive performance of these Fusion locations, noting a significant increase in both sales and profit.
Looking to the future, Halfords plans to leverage its unique omnichannel platform. The CEO stated, “While the short-term outlook remains challenging, we will continue to build on what we can control to deliver on our strategy this year and beyond.” The uncertain economic conditions in the UK and their potential impact on consumer behaviour remain a concern for the company.
Halfords remains committed to navigating economic challenges while implementing strategic growth initiatives.
