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Investing.com -- Halfords (LON:HFD) on Wednesday reported a 6.4% increase in underlying profit before tax to £38.4 million for the 52 weeks ended 28 March 2025, exceeding its previous guidance of £32 million to £37 million.
The company also reported a statutory pre-tax loss of £30 million, primarily due to a £49.1 million non-cash impairment on retail goodwill and other assets.
Group revenue rose slightly to £1.72 billion from £1.71 billion. Like-for-like sales grew 2.5%, with motoring accounting for around 80% of sales.
Gross margin increased to 50.7%, up from 48.2%, driven by pricing optimization, product mix and foreign exchange benefits.
Retail revenue reached £1,004.9 million, up from £997.1 million. Retail gross margin improved to 49.3% from 47.3%.
The segment recorded underlying EBIT of £39 million, down from £41.1 million, reflecting increased wage costs and performance-related incentives.
Autocentres revenue fell to £710.3 million from £715.7 million. However, gross profit rose to £373.4 million from £353.8 million, with gross margin up to 52.6% from 49.4%.
Underlying EBIT increased to £15.7 million from £13.8 million. Excluding Avayler, the group’s loss-making software unit, EBIT for the segment was £18.3 million, up 21.2%.
Cost savings of £35 million helped offset £33 million in inflation-related expenses, mostly tied to labor costs.
Inventory declined £12.3 million to £225.2 million, and free cash flow rose to £43 million from £29.4 million.
The group ended the year with net cash, excluding leases, of £10.1 million, compared to net debt of £8.1 million in FY24.
Non-underlying charges totaled £68.4 million, including £14.9 million in closure costs, £2.9 million in cloud migration costs and £1.5 million in organizational restructuring.
The group said garage closures would be earnings-accretive, with affected employees redeployed to other sites.
Capital expenditure rose to £52.7 million from £43.7 million, with £7.6 million spent on expanding the Fusion Motoring Services program.
At year-end, 50 Fusion garage sites were operational. Halfords plans to grow that number to more than 100 in FY26 and 150 by FY27.
Membership of the Halfords Motoring Club surpassed 5 million. The company reported higher average spending among premium members, who pay an annual fee for enhanced benefits.
Avayler recorded £2.7 million in revenue and a £2.6 million loss. The unit launched a pilot with a North American client but was affected by the Chapter 11 filing of another customer, ATD.
Halfords operated 373 retail stores and 632 Autocentre locations at the end of the year. Eleven stores were closed during FY25. The group also had 784 service vans, up from 770.
The company declared a final dividend of 5.8p, bringing the total payout to 8.8p, up 10% from 8p. FY26 capital expenditure is expected between £60m and £70m.