Halfords to take on 1,000 car technicians but profits sag amid spending squeeze
Halfords has seen interim profits halve as under-pressure consumers cut back on non-essential spending but the group is to take on 1,000 technicians to boost its flourishing car servicing offer.
The car parts and bicycle retailer reported underlying pre-tax profits of £29 million for the six months to September 30, down from £57.9m a year ago, with the previous year’s results boosted by £9.2m of business rates relief. Revenues rose 10.2 per cent to £765.7m over the first half but retail like-for-like sales were 6 per cent lower year-on-year as it saw consumers rein in spending on bikes, where sales plunged 12.5 per cent as it came up against strong trading the previous year.
Halfords said it was seeing “resilient trading in the more needs-based categories, but there has been a softening in the more discretionary areas”. The group added: “It remains challenging to predict consumer confidence for the remainder of 2022-23 but we don’t expect the challenges that businesses are facing to dissipate soon.”
It cautioned that it is now expecting full-year underlying pre-tax profits at the lower end of its previous guidance for between £65m and £75m. However, it cheered the success of its car servicing and motoring business, with service-related sales now accounting for 42.6 per cent of all group revenues and expected to rise to more than 50 per cent in its next financial year thanks to its recent acquisition of Lodge Tyre.
Halfords - the UK’s largest provider of motoring services with more than 600 garages and nearly 700 vans - said it was launching a recruitment drive to fill 1,000 new automotive technician roles over the next year to boost its burgeoning car servicing offer. The move will see it prioritise over-50s, women and disadvantaged young people for the jobs.
Matt Britzman, equity analyst at investment platform Hargreaves Lansdown, said: “Halfords’ decision to focus on building its more reliable service revenue stream couldn’t have come soon enough, as consumers battling cost pressures are moving away from more discretionary spend. This trend is particularly visible within Halfords once booming cycling division, where sales are coming back down to earth after the pandemic boom.”
Halfords chief executive Graham Stapleton said: “We are hoping to attract retirees back into the workforce as well as increasing the number of women in technician roles. In such a volatile macroeconomic environment, our strategy of focusing on the kind of predictable and recurring revenue that comes from motoring services and needs-based products has never been more relevant.
“Once the acquisition of Lodge Tyre has been annualised, service-related sales will account for over 48 per cent of our revenues and we expect this to grow to over 50 per cent next year. Lodge Tyre will also mean motoring represents around 77 per cent of total sales,” he added. “The success of our motoring loyalty club is exceeding our expectations, as customers continue to be attracted by a range of discounts and offers that are aimed at helping motorists across the UK with the rocketing cost of running and maintaining a car.”