Halfords Reports £30 Million Pound Loss as Restructuring and Labour Costs Bite

Leading automotive and cycling retailer Halfords has plunged into the red, reporting a statutory pre-tax loss of £30 million for the 52-week period ending 28 March. The significant downturn stems from restructuring costs and a substantial write-down of its retail business value, attributed to rising UK gilt yields and escalating labour costs.

The troubled retailer’s financial results revealed a £49.1 million non-cash impairment, predominantly affecting its retail segment. The company’s leadership cited elevated UK-wide borrowing costs and projected increases in the national living wage and national insurance contributions as primary factors behind the writedown.

Chief Executive Henry Birch emphasised that external factors played a crucial role in the company’s performance, noting the discount rate’s rise from 8.5 per cent to 9.5 per cent, driven by fluctuations in UK gilts over the past year. The anticipated impact of increased labour costs, estimated at £23 million annually, has been incorporated into future forecasts.

Despite these challenges, the company’s underlying pre-tax profit showed resilience, rising 6.4 per cent to £38.4 million, surpassing analyst expectations. Group revenue maintained stability at £1.71 billion, though the company announced plans to close underperforming garages and stores as part of a strategic review.

The retailer’s motoring segment remains robust, yet the cycling division continues to face headwinds following the post-pandemic slowdown. Birch maintains a committed stance towards the cycling business, highlighting Halfords’ position as the UK’s leading bicycle retailer while acknowledging that 80 per cent of revenues derive from motoring products.

Operational challenges persist at the company’s Coventry distribution centre, with warehouse management system updates expected to impact profits in the current financial year. The final phase of this technological overhaul at the Crick site is scheduled for completion in 2027.