Halfords may raise garage prices after budget hit

Halfords Group may raise repair garage prices after it warned that budget measures would increase its wage bill by about £23 million.
The FTSE 250 one-stop shop for motorists and cyclists said the cost implications of next April’s rise in national insurance contributions and the minimum wage increase were “particularly acute” given its workforce of more than 12,000, adding that the impact of budget moves on consumers was “unclear”.
Halfords, which has 377 retail stores and about 550 garages, said only about £9 million of the extra cost burden was already included in its plans for 2025-26 and mitigated.
The company, which reported a 23.3 per cent drop in interim pre-tax profit to £17.8 million in the six months to September 27 from £23.2 million a year ago, said it may “pass through” the higher wage costs to customers across its Autocentres arm. Revenue during the half-year dipped 1 per cent to £864.8 million from £873.5 million previously.
“It will inevitably be challenging to fully mitigate a single-year cost increase of this magnitude, particularly in the retail business where many of our product categories are discretionary and/or big ticket and substantial cost has already been removed in recent years,” the company said.
Graham Stapleton, chief executive of Halfords, which stuck with its full-year guidance but cautioned over an “uncertain” trading outlook, said: “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.”
He said reform of the apprenticeship levy system would help businesses to upskill existing staff and offset some of the cost increases.
The company, founded in 1892, enjoyed a boost during the Covid pandemic when more people took to cycling and had spare cash to spend on bikes and cars as lockdowns boosted household savings. This cycling boom has since faded following a slowdown in consumer spending.
In June, the retailer warned of a slowdown in both the cycling and tyres market, which it said was due to a slowdown in consumer spending and unseasonal weather.
Manjari Dhar, an analyst at RBC Capital Markets, the investment bank, said: “Near term, we expect continued market weakness in tyres and cycling, but we see potential for some recovery in the motoring market, given some improvements in UK consumer sentiment recently.”
Shares in Halfords closed up 17¼p, or 13.3 per cent, at 146½p, still down 26.5 per cent on the year so far.
• Annual profits at Topps Tiles fell by almost half, hurt by weak demand in the home repair and improvement sector. The UK’s largest tile retailer, with more than 300 stores, reported adjusted pre-tax profit of £6.3 million for the year ended September 8, compared with £12.5 million a year earlier. The new financial year has led to a return to modest sales growth but Rob Parker, chief executive, said consumer confidence remained weak.