Both Halfords and Homebase have cited a challenging consumer environment for their tumbling sales. Homebase described its customer spending as “cautious”, while Halfords stressed that drivers were potentially in unsafe vehicles as they delayed essential maintenance.
Halfords cited a combination of mild and wet weather, as well as customers balancing difficult spending decisions in the lead up to Christmas for weaker sales. Its latest trading statement showed Retail Motoring, which had seen monthly LFL growth averaged 10.2% in October and November, fell to a 15.3% decline in December last year. The poor weather could also be blamed for cycling LFL declining by 1.2.
Additionally, the retailer reported customers increasingly purchasing on credit, which is leading to lower margins on bike sales.
Halfords has therefore reduced its profit expectations, before tax, down to between £35mn and £40mn for the full year, compared with the previous forecast of £48mn to £53mn.
Graham Stapleton, chief executive officer of Halfords, commented: “In what remains a very challenging time for our customers, we are pleased to have delivered a resilient performance in Q3. Against the current backdrop, our continued strategic shift towards needs-based and motoring service-related revenues has never been more relevant.
“However, we are still seeing drivers delay essential maintenance and there is a worrying increase in potentially unsafe vehicles on the road. Recent TyreSafe data estimates that one-in-four tyres on Britain’s roads could be illegal, equating to just over 10 million tyres.”
Homebase has seen its sales plummet from £788mn to £701mn for the year to January 2023. It has reported a loss of £84mn.
Homebase described 2022 – 23 as a “challenging year for retail,” with consumer confidence at an all-time low. It has also seen its costs increase, including over £40mn across freight and £10mn on energy bills.
Furthermore, the homewares retailer was fined for failing to file annual accounts to Companies House, which were due in December.
A spokesperson for Homebase, said: “Whilst the trading and operational conditions have, and remain challenging, Homebase is well set up and prepared for when the market conditions improve. Over the past five years, significant investment has been made to enhance stores [and] build a strong digital operation.”
However, there were reports this week that Homebase is up sale for the second time within four years. Potential buyers include B&M and The Range.
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