The aftermath of the new government's first Budget continues, with Halfords announcing it expects a £23m impact due to tax increases.
In its latest interim results, the Redditch-based retailer stated that the combined effect of Budget policies would increase costs by around £23m, with approximately £9m already fully mitigated, as reported by .
The Budget saw employers' national insurance rise to 15% and the minimum wage increase by 6.7%. Halfords is the latest company to warn of the business impact.
"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," said CEO Graham Stapleton.
He urged the government to mitigate the impact by accelerating apprenticeship levy reform, which would help "upskill existing colleagues and offset some of the new headwinds".
The company noted that the Budget's consumer impact was "unclear", suggesting it could better mitigate headwinds in its needs-based autocentres servicing business. "Additional tactical and structural options to support mitigation are under review," it added.
The firm announced a 23% dip in pretax profit during the first half of the year, landing at £17.8m yet surpassing market predictions. The underlying profit was relatively stable at £21m.
They experienced a negligible decline in like-for-like sales by 0.1%, with a decrease of 0.7% in retail sales being somewhat counterbalanced by a 0.8% increase in autocentre revenue. Despite fiscal challenges outlined in the Budget, the company remains confident in meeting consensus forecasts for FY2025, resulting in a share price hike of over five percent in early trading.
"While the short-term outlook remains challenging, we will continue to build on our unique omnichannel platform and focus on what we can control to deliver on our strategy this year and beyond," Stapleton remarked.
