Halfords’ warning as profits drop by a fifth

RETAILER HALFORDS has become the latest retailer to warn over consumer confidence as it revealed half-year profits dropped by nearly a fifth.

The car parts-to-bicycles chain said shoppers were holding back on spending on discretionary items, which was hurting bike sales in particular.

A number of retailers have been cautioning over the consumer outlook as Brexit worries take their toll, with Sainsbury’s boss Mike Coupe also on Thursday describing it as unusually “uncertain” going into the peak Christmas season.

This follows similarly cautious comments on sales from Marks & Spencer on Wednesday.

Halfords reported a 23 per cent fall in half-year pre-tax profits to £28.2m and said it expected the “short-term conditions for discretionary spend to remain challenging”.

On an underlying basis, pretax profits dropped 17.1 per cent to £30.5m in the six months to September 28.

The chain said it still continues to expect full-year profits to remain “broadly” flat as it predicts a pick-up in earnings over the final six months.

But it stressed this was dependent on trading over Christmas and assuming average winter weather.

Graham Stapleton, recently appointed chief executive of Halfords, said: “Despite the challenging UK consumer environment, we delivered a robust sales and cash-flow performance in the first half, with costs and profit broadly in line with our expectations.”

The half-year results showed like-for-like retail sales rose 2.3 per cent, while its autocentres chain saw growth of 3.3 per cent.

But Halfords said: “Whilst we remain confident in the longterm growth prospects for the cycling market, we expect the short-term conditions to remain challenging given that cycling is a discretionary category.”