Halfords is planning to shutter a number of its garages this year, facing pressures from heightened labour costs following changes in last year's Autumn Budget.
Shares took a hit, dropping nearly two per cent as markets opened, as reported by .
The company singled out sites scheduled for closure as failing to meet the "level of customer experience to which we aspire."
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Following the increased National Insurance Contributions (NICs) and the minimum wage hike outlined in the Autumn budget, Halfords reported an upsurge in costs by £33m.
The company assured that "the majority" of colleagues affected will be relocated to other nearby garages, emphasising that the planned shutdowns will "immediately" enhance earnings, although it refrained from confirming the exact number of closures.
Over the previous year, the retailer has already offloaded 11 stores, including outlets in Devon, Hampshire, and Dudley, and as of March 28, sits with a portfolio of 373 retail shops and 632 autocentres.
'Encouraging' rise in annual sales
Chief executive Henry Birch remained upbeat about Halfords' overall trajectory.
He proclaimed: "The business has delivered a strong financial performance [this year], made good strategic progress and has a clear plan in place to tackle external inflationary forces."
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Birch highlighted Halfords’ distinctive market position saying, "Halfords has a unique combination of retail stores, garages and mobile vans, a trusted brand, scaled omnichannel infrastructure, and access to valuable proprietary data."
Like-for-like sales climbed by 2.5 per cent up until March 28, with total income hitting £1.7bn.
Underlying profit before tax at the company saw a 6.4 per cent increase to £38.4m, and there was an improvement in gross margin from 48.2 per cent to 50.7 per cent.
Julie Palmer, partner at Begbies Traynor, described Halfords' financial outcomes as "encouraging."
"Demand from cyclists has been a bright spot, and with the current spell of good weather, that trend looks set to continue."
"However, the road ahead isn't entirely smooth – motorists remain more cautious, with spending by this group more constrained by a still-subdued consumer backdrop, and it will be careful to manage rising costs across the business," she remarked.
Halfords announced a net cash position of £10.1m, a rise from £8.1m at the close of the previous financial year.
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The company anticipates counteracting "another year" of inflation through a "combination of pricing, buying and cost opportunities," while maintaining a degree of caution regarding the outlook for consumer spending.
"We remain committed to a strategy emphasising motoring services across our unique combination of Retail and Autocentres, the successful execution of which will enable significant value creation in future years," Halfords stated.