Halfords set to confirm stalling sales amid cost of living crisis

Henry Saker-Clark PA Deputy Business Editor & Chris Ballinger
·2-min read
Halfords store front
-Credit: (Image: Paul Faith/PA)


This Tuesday (November 26), Halfords is expected to unveil stagnating sales figures for the last year, as stakeholders brace for a deep dive into the impact of autumn Budget cost increases on the company's bottom line. The automotive and cycling retailer has previously indicated that its customers have been reluctant to splash out on expensive items against a backdrop of economic uncertainty over the past twelve months.

In an anticipated update on November 26, Halfords projects a slender fall of 0.1 per cent in half-year sales up until September 27 in comparison with the previous year. Last month, Halfords pointed out this minimal decline was in relation to a particularly strong prior performance from its garages business.

Despite the minor downturn, the group reported continued growth in services, maintenance, and repairs recently, although tyre fitting saw a plateau, with frugal consumers opting for cheaper options. Operating approximately 380 stores and around 550 garages throughout the UK, Halfords acknowledged that record spring rainfall played a role in dampening retail sales, notably impacting leisure cycling activity.

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Analysts believe the firm is pinning its hopes on recent cost-cutting measures to maintain financial stability amidst ongoing pressures on consumer expenditure. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, commented: "It’s been a tough start to the year for Halfords, as weak consumer demand saw first-half sales growth grind to a halt."

"Price-conscious customers have been trading down to budget ranges, and a lack of big-ticket discretionary sales has weighed on performance. Halfords is leaning into cost cuts to try and help soften the impact on the profit line."

The company previously announced its aim to make £30 million in cost savings this year, in an attempt to offset around £35 million in cost inflation. Investors are eagerly awaiting an update from the management on the progress of these cost-saving measures, as well as the potential impact of last month’s Budget.

Earlier this week, retailers sent a letter to the Chancellor warning that they may need to cut jobs and increase prices due to the effects of a rise in national insurance contributions (NICs), packaging taxes and a planned increase in the minimum wage. Analysts at Peel Hunt suggested that the majority of the cost increase will likely affect the company's profitability due to difficulties in finding further savings or passing it on through prices.

They stated: "The NIC increase looks likely to be in the early double digits, and finding additional cost savings will be challenging, in our view. It is unlikely that Halfords will be able to raise prices in either division."

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