Halfords takes £14m hit from pound fall but hopes for staycation boost

The slump in sterling has thrown a spanner in the works for Halfords as it dragged annual profits lower - but the business hopes to take advantage by harnessing a rise in staycations.

Halfords said the collapse in the pound since the referendum last year, driving up the price of imported goods, had cost it £14m.

That helped pre-tax profits fall 11% to £71.4m for the year to the end of March despite like-for-like sales growth of 2.7% at the cycling and car parts retailer, which also has a chain of car service centres.

Chief executive Jill McDonald said: "Profit performance this year was impacted by the weaker pound but our plans are well developed and I am confident this will be offset over time."

She also acknowledged that the business was entering a "challenging period… with uncertainty over consumer spending" echoing warnings elsewhere about the squeeze facing households from rising inflation and stagnant pay growth.

But she said there could also be a positive impact for the business from the weak pound.

"The depreciation in sterling could result in more UK consumers choosing to holiday in the UK, the so-called 'staycation'," said Ms McDonald.

She said this would follow a pattern seen last time there had been a significant fall in the pound, in 2009.

"We are well placed to harness this trend with our leading product and service offering across cycling, roof boxes, child car seats, camping and motoring in general," she said.

"We have already observed early signs of this trend in 2017."

Halfords said like-for-like sales were lower in the last period of the financial year but said this was impacted by the late timing of Easter and trading since then painted a positive picture.

Ms McDonald is due to leave the business later this year to take up a role at Marks & Spencer.

Halfords employs around 10,000 people, and has nearly 500 retail stores plus more than 300 autocentres.