Bike and car parts retailer Halfords has revealed plunging profits after it was knocked by soaring costs and customers cutting back their spending.
But the Redditch-based listed firm remains upbeat, forecasting a return to earnings growth over the year ahead.
Halfords posted a 55 per cent fall in pre-tax profit to £43.5 million in the year to March 31, down from £96.6 million, while underlying profits were 43 per cent lower at £51.5 million. Revenue was £1.59 billion, a climb from £1.38 billion for 2021/22.
The group said its costs had surged by around £68 million over the year as goods and shipping prices jumped higher while also taking a hit to the sales of so-called big ticket items such as bikes as customers reined in their spending amid the cost-of-living crisis.
Chief executive Graham Stapleton told the PA news agency that consumers were cutting back on discretionary spending but also on some essential items like tyres.
The group says it is hopeful of a turnaround in the current year as costs fall, with its own inflation expected to rise by around £30 million - less than half that seen in 2022/23.
It has been driving cost savings across the business, largely through store lease renewals and wider efficiencies.
"It's been a very significant headwind to get through," Mr Stapleton said.
"The good news is that, across the business, inflation is forecast to be lower this year. It's getting better but there's still inflation."
Analysts at Peel Hunt said: "While March was wet and a pretty miserable end to 2022/23, and April did not start terribly well either, an improvement in the weather has brought a decent uplift in trading fortunes.
"The bike market remains under pressure although recent weeks have seen some pick-up but, more encouragingly, the motoring market has been strong and Halfords' pace of gaining market share has, we think, accelerated."
