Halfords says that online sales grew by more than 200% during the first quarter of its current year and meant that its overall figures recovered quickly from an initial drop of -23% in April. It says its figures, both for its latest financial year and for the first quarter of this year, show the strength of its online business, and the value of its investment in a new web platform.
The update came as Halfords reported a slight rise in sales in its latest full-year, with a drop in profits that stemmed from the initial Covid-19 lockdown.
Halfords turned over £1.2bn in the 53 weeks to April 3. That’s up by 0.3% on the same time last year. Within that, retail sales of £961.0m were down by 2.7% on last time but autocentre sales of £194.1m were up by 18.8%. In retail, says Halfords, a strong cycling performance (+2.3%) was not enough to offset a tough motoring market.
Pre-tax profits of £52.6m were down by 4.9% compared to the same time last year. Had the financial year run for 52 weeks, as the previous year, sales would have come in ahead of expectations at £55.9m – but, says Halfords, the impact of Covid-19 meant full-year profits were down on last year. One-off costs of £32.1m were mostly related to its decision to exit the Cycle Republic business in order to focus online.
Halfords chief executive Graham Stapleton said: “This has been another year of good progress against the backdrop of a retail market that was challenging even before the emergence of the Covid-19 pandemic. We are particularly pleased to have delivered strong revenue growth in group services (+9%), online (+17%) and B2B (+25%), which are our main areas of strategic focus.”
He added: “The start of the current financial year has of course been dominated by the impact of Covid-19, and our status as an essential retailer was a clear endorsement of the wider role that Halfords has to play in keeping the UK moving. Having responded quickly and decisively to cater for the surge in popularity of cycling during lockdown, we are now seeing increased demand for motoring services and products as people start using their cars regularly again having not done so for the last few months.
“Despite the wider uncertainty caused by Covid-19, we remain confident in the long-term prospects for Halfords given the strong macro tailwinds within our market-leading motoring and cycling businesses.”
The Covid-19 effect
During most of the first quarter of the current financial year Halfords has been able to remain open during lockdown as an essential retailer. It took the decision to operate a reduced – but gradually growing – number of stores as ‘dark stores’ with staff serving customers from the entrances during April and May. By the end of May, these started to be repurposed as ‘Lite’ stores, with limits on the numbers of customers able to enter at any given point. By July 3, 359 shops were trading under the ‘Lite’ format and eight as dark stores, while 77 were closed.
During the first quarter, to July 3, Halfords has seen strong cycling sales (+57.1% on a like-for-like basis that strips out the effect of store openings and closures). Online sales have grown by 200% year-on-year. This, said Halfords in its financial statement, highlighted “the value of the investment in our new web platform, which dealt well with the unprecedented shift to online ordering during the Covid-19 lockdown, when physical store operations were severely curtailed.” But overall, group sales for the 13 weeks were 2.8% down in total on the same time last year, and down by 6.5% on a like-for-like basis. This, says Halfords, was “significantly better than anticipated in late March, and an improvement on the 23% LFL decline for the four weeks to May 1 that we reported on May 6.”
Halfords is ranked Top50 in RXUK Top500 research.