Halfords half-year profit knocked back by Brexit-hit pound

The retailer said that it will stomach a £25m increase in costs this year thanks to Brexit

Halfords said it could benefit from an increase in the number of people choosing to holiday at home (Reuters)

Shares in Halfords slumped after the retailer revealed that half-year profits took a knock from increased costs linked to the Brexit-hit pound.

The car parts-to-bicycles chain said that pre-tax profit fell 6.4 per cent to £36.6m in the six months to 29 September, while underlying pre-tax profit slipped 9.8 per cent to £36.8m.

Sales rose 3.8 per cent to £588.7m in the period, but Halfords booked £15m of additional costs as, in common with its high street peers, the pound's descent since the referendum saw its purchasing power plummet.

Overall, the retailer said that it will stomach a £25m increase in costs this year thanks to Brexit, although it has plans in place to mitigate the impact, including increasing some bike prices.

In common with most British retailers, its products are sourced in dollars.

Nevertheless, like for like sales rose 1.5 per cent in the period, with motoring seeing a 1.9 per cent increase and comparable cycling sales up 2 per cent.

Total cycling sales were up 7 per cent and finance chief and interim boss Jonny Mason said: "It is pleasing to report positive sales growth for this period, despite the poorer summer weather and the uncertainty in the UK economy.

"We are also pleased with our profit performance in the half, as we offset a large part of the (circa) £15m increase in costs that resulted from the impact of the weaker pound.

"Looking ahead, we have strong plans both in-store and online for the cyber, Christmas and winter peaks."

Halfords added that while "prolonged uncertainty" over Brexit terms, continued sterling weakness and a slowing economy would hurt the firm, it could also benefit from an increase in the number of people choosing to stay at home rather than holidaying abroad.

PA