A fifth of Halfords sales took place online in its latest full year, while almost a quarter were sales made in connection with an in-store service. But the costs of equipping the retailer for a cross channel future, combined with a mild winter and weak consumer confidence, led to a 24% drop in full-year profits, despite a modest growth in sales.
Overall, the retailer, ranked Leading in IRUK Top500 research, reported sales of £1.1bn in the year to March 29 2019. That’s 0.3% up on the previous year – or 1.1% on a like-for-like basis that strips out the effect of store openings and closures. Pre-tax profits of £51m were down by 24% from £67.1m a year earlier.
Some 20% of group sales came via ecommerce – up by 9.5% during the year, with 83% of orders placed via its website collected in store. Service-related sales accounted for 24% of group sales, with both income from fitting and the number of individual jobs completed growing during the year. By the end of the year, 80 different were available on demand in-store, up from 30 in the 2017 full-year. The integration of store and services also helped to drive online sales, since 83% of items ordered online were collected in a store.
But cost of investing in the business for the future, with retail costs up by 5% and auto centres costs up by 1.7%, held back profits.
Halfords said mild winter temperatures also contributed to its subdued performance and said that although cycling sales rose by 2.6% during the year, motoring sales were down by 0.4% on a like-for-like basis. Weakened consumer confidence also played a part, it said, along with rising costs.
Halfords chief executive Graham Stapleton said: “Since launching our new strategy, we have seen encouraging early progress. As we strengthen our unique services proposition, customers are responding positively, and we are particularly pleased that nearly a quarter of all Halfords sales are now service related.
“Consumer confidence remains fragile; however, we remain confident that the strength of our customer offer, our people, our strategy and clear focus on our medium-term financial targets leave us well-placed for long-term sustainable growth.”
The retailer also gave an update on its progress in creating a single view of its customers – it can now match 75% of all transactions to the customer that made them. At the same time, the number of customers buying rose by 7.2%, boosted by a free MOT promotion.
Looking ahead, Halfords expects underlying sales growth to be muted in its coming financial year. “Although it is still early in the delivery of our strategic transformation, we believe that progress in visible customer initiatives, such as a strengthened financial services offering, will deliver a modest boost to sales,” it said. It expects costs to continue to grow during the year, but at a slower rate.
Image courtesy of Halfords