Halfords Autocentres revenue up 70% year-on-year; 14.3% like-for-like

Halfords Group has reported very strong financial figures that show group revenues amounted to £765.7 million in the first half of 2023. Of this figure, £265.2 million was generated by the Halfords Autocentres business. And what’s more, the latest projections suggest that the services part of the wider Halfords group, within which Autocentres is found, will account for the majority of revenue by 2024. Currently, service-related sales represent 42.6 per cent of group revenues in the period and are expected to reach circa 48 per cent of sales on an annualised basis following the acquisition of Lodge Tyre.

Halfords’ growing autocentre business is also positively impacting group profitability with group gross margin of 51.3 per cent up 1.2 percentage points over the 50.1 per cent delivered in full-year 2020 figures. However, while Autocentres margin has improved on an underlying basis since 2020, the company’s financial statement reports that profits have been “diluted by the growth in tyre revenue through acquisition, which is lower margin…” Indeed, the figures specify that gross margin declines -39 basis points compared with full-year 2022 due to “motoring price investment, cost of goods price inflation, and the annualisation of National Tyres”.

On the subject of National Tyres, Halfords reports that the integration is “progressing well” following the acquisition in December 2021, with all sites now running the Avayler garage platform, “PACE”. In addition, MOT lane installation has commenced, and re-branding is being tested in selected sites.

Graham Stapleton, Halfords Group chief executive officer, highlighted the growing importance of the Autocentres business within the wider group strategy: “….Once the acquisition of Lodge Tyre has annualised, service-related sales will account for over 48 per cent of our revenues and we expect this to grow to over 50 per cent next year. Lodge Tyre will also mean motoring represents around 77 per cent of total sales.”

Halfords executives also pointed to the chain’s Motoring Loyalty Club as another business driver, stating that it is “exceeding our expectations, as customers continue to be attracted by a range of discounts and offers that are aimed at helping motorists across the UK with the rocketing cost of running and maintaining a car.”

(Chart: Halfords)