Halfords is urging the Government to urgently reform the Apprenticeship Levy as it posts a dip in underlying profit before tax performance for the first half (H1) of its financial year.
Motoring now accounts for around 80% of Halfords’ revenues, which dropped slightly by 1% to £864.8 million year-on-year in H1.
The revenue drop was more pronounced for its Autocentre business, which saw a 2.3% dip from £356.9m to £348.7m over the same period.
Despite the drop in revenues and underlying profit, the business still improved its gross margin performance across its Autocentre and Retail divisions by 2.6% and 4.4% respectively over that first half.
The gross margin performance has been driven by “price optimisation” and its “Better Buying” programme.
Tyre market volumes also increased by 0.8% and the business has looked at costs to save £14.6m in H1. It is targetting savings of £30m for the full year.
More Fusion sites targeted to launch in 2024
Graham Stapleton, Halfords chief executive, said the business has continued to focus on “controlling the controllables against ongoing headwinds”.
He said: “We are particularly excited by the outstanding results we are seeing from our Fusion Motoring Services programme, which creates a stronger connection between our Retail stores and Autocentres in a town to fulfil all our customers’ motoring needs. Now live across 22 locations, these motoring services locations are delivering phenomenal returns with a significant uplift in both sales and profit.
“Given the strength of these results, we are now targeting 40 Fusion sites this year.
“Critical to our success, and what really stands us apart from the competition, are more than 12,000 fantastic colleagues.
“We continually prioritise investment in their training – with skills and capability our number one focus.”
The Apprenticeship Levy is an amount paid at a rate of 0.5% of an employer’s annual pay bill for businesses that have an annual pay bill of more than £3m.
Stapleton said the cost implications from the recent UK Budget are particularly acute for a specialist retailer.
He added: “While we will work hard to mitigate these costs, we urge the Government to consider alternative ways of supporting businesses like ours, including the acceleration of Apprenticeship Levy reform, which would help us to upskill existing colleagues and offset some of the new headwinds.
“Looking ahead, while the short-term outlook remains challenging, we will continue to build on our unique omnichannel platform and focus on what we can control to deliver on our strategy this year and beyond.”