Following today’s release of Halford’s figures for the 13 weeks ending 29th December 2023; Jamel Boughedda, retail analyst at GlobalData, a leading data and analytics company, offers his view: “The combination of mild and rainy weather, which reduced footfall and demand for winter items, and consumers prioritising spending in more essential areas, harmed Halford’s Q3 FY2023/24 sales, with sales falling below expectations. The retailer’s group revenue rose just 1.6% as growth across its needs-based categories, which has continued to prop Halfords up, was once again offset by a poor performance in discretionary areas such as cycling. Despite a stronger start to the quarter for retail motoring, with October and November’s monthly like-for-like (l-f-l) sales increasing by an average of 10.2%, shoppers pared back spending in December, with a 15.3% decline in l-f-l sales as store footfall decreased, and consumers’ already stretched finances moved away from motoring essentials to Christmas festivities. However, the retailer was able to maintain its previously trimmed full-year profit guidance as it continues to focus on further cost savings and more profitable sales.
“Halfords’ retail segment saw sales fall 0.1%, with cycling once again experiencing a decline in revenue of 1.2%. Although this is an improvement on its H1 (-3.1%,) it still showcases that the retailer’s efforts online have been less than successful, with its online cycling business Tredz being unable to capitalise on the demise of Wiggle, although it has continued to trade through its administration. Tredz must make sure its online customer service meets the needs of shoppers, as many customers choose to purchase bikes instore rather than online. Halfords added that children’s bike sales rose 5.0% in December. The retailer needs to find a way to replicate this performance in adult bikes, with its current Cycle2Work scheme not being enough to prevent declines in a difficult consumer environment.
“Halfords’ autocentres segment, which has been a star performer in recent years, was able to grow by 4.1% on the back of an exceptionally strong prior-year comparative (+74.1%). Its autocentres, aided by developments to its customer proposition, have benefitted from consumers prioritising repairs to their current vehicles over buying new as the cost-of-living crisis persists. However, its initiatives, such as buy now, pay later, have helped support spending in this area. Halfords’ strategic shift towards more needs-based services is expected to continue delivering revenue growth, with a stronger start to Q4 trading and January sales growth in retail motoring normalising. Given the difficult economic environment and Halfords remaining cautious on the recovery of the market in the short-term, the retailer must ensure it continues to leverage its Motoring Loyalty Club and develop its online
