Halfords interim profit drops as weaker pound drives up costs

Halfords reported a drop in interim profit on Thursday as the weaker pound increased costs.

In the 26 weeks to 29 September, underlying pre-tax profit fell 9.8% to £36.9m, although revenue was up 3.8% to £588.7m. Retail revenue rose to £511m from £489.1m, but revenue from Autocentres was down 0.6% to £77.7m.

The company declared an interim dividend per share of 6p, up from 5.83p in the same period a year ago.

Chief financial officer and interim chief executive Jonny Mason said: "We have delivered more improvements for our customers in this first half, with new services for motorists and cyclists, provided by trained, friendly, expert colleagues, and new ranges of great products. It is pleasing to report positive sales growth for this period, despite the poorer summer weather and the uncertainty in the UK economy.

“We are also pleased with our profit performance in the half, as we offset a large part of the circa £15m increase in costs that resulted from the impact of the weaker pound. Looking ahead, we have strong plans both in-store and online for the Cyber, Christmas and winter peaks."

Halfords continues to expects FY18 pre-tax profit to be in line with current market forecasts, with all financial guidance for the current financial year unchanged. It added that as previously guided, the depreciation of the pound brings an increase of around £25m in the cost of goods in FY18, around £15m of which occurred in the first half.

“Our mitigation plans are on track and we continue to anticipate that we will recover the full impact over time. The FX impact reduces going forward, and if sterling remains at the current levels, we do not anticipate further adverse year-on-year impact in FY19.”