Halfords warns it may raise repair garage prices after £23m cost hit from Budget

Retailer Halfords has signalled it may look to raise repair garage prices as it warned that Budget measures will send its wage bill soaring by around £23 million.

The firm said the cost implications of next April’s rise in national insurance contributions (NICs) and the minimum wage increase were “particularly acute” given its workforce of more than 12,000, while it also said the impact of Budget moves on consumers was “unclear”.

Halfords said only around £9 million of the extra cost burden was already included in its plans for 2025-26 and mitigated.

The group said: “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.

“We anticipate being able to pass through wage inflation more easily in the Autocentres business, where a greater proportion of revenue relates to services.”

Halfords is calling on the Government to help soften the blow by considering overhauling the Apprenticeship Levy.

Half-year results out on Tuesday showed the car parts-to-bicycle chain’s pre-tax profits fell 23.3% to £17.8 million in the six months to September 27 as revenues dropped 0.1%, with more difficult retail trading offsetting growth in its Autocentres arm.

Profits fell 1.4% on an underlying basis, to £21 million.

Graham Stapleton, chief executive of Halfords, said: “The cost implications from the recent UK Budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.

“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.”

The group stuck with its full-year guidance, but cautioned over an “uncertain” trading outlook after the Budget, while it said it would also face extra costs over the second half for shipping and temporary garage closures as it upgrades sites to roll out its new Fusion Motoring Services concept.

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