Halfords’ fleet servicing business shows growth
In a trading update to the City for the year ending March 30, Halfords expects to file returns of around £861 million in sales, with the Autocentres divison, which specialises in MOTs, car servicing, tyre and repairs for fleets and consumers accounting for around £110m. As a result, group profit before tax is expected to come in between £90 and £93 million.
While some areas of the Halfords business have been disappointing, such as satellite navigation sales, car tuning and child safety equipment, the Autocentres revenue has continued to deliver strong revenue growth due to the ‘recognition of the value offered by the Halfords brand’.
Halfords Autocentres’ operating profit is expected to be approximately £7 million, reflecting the start-up losses associated with the centre-opening programme and the continued investment for growth in key areas, such as above-the-line advertising and direct mail.
With the acceleration of the lower-margin tyre proposition, gross margins will be marginally down on the previous financial year.
Halfords says there will be continued investment in building brand awareness in addition to the roll out of up to 30 new centres, and expects Autocentres to deliver low double-digit profit growth in this financial year.
David Wild (Inset), chief executive officer, said: ‘The continued rise in fuel prices remains a concern and retailers face a rise in operating costs. While we have historically demonstrated an ability to alleviate these it may be more difficult this year.
‘The strong performance from our growth areas provides an attractive route to strengthen our business. We are investing to drive our strong brand even further by developing our fitting resources, increasing marketing and enhancing our multi-channel offer.
Investing in these opportunities will accelerate the evolution of Halfords from a traditional retailer to a contemporary provider of products and services, and will contribute future growth,' he added.