The cycles and auto-parts retailer, which buys a large chunk of its goods in US dollars – between £190-230million a year – took a £14million hit from rising costs after a near-20 per cent plunge in sterling’s value.
It has softened the blow by currency hedging, squeezing suppliers, cost-cutting and raising prices, but underlying annual pre-tax profit was still deflated by 7.5 per cent to £75.4milion.
Revenue increased by 7.2 per cent to nearly £1.1billion. But Halfords believes it could also benefit from these currency headwinds as more people decide to take their holidays in the UK rather than fork out more for overseas travel.
Chief executive Jill McDonald said: “We did see a real pickup in some staycation related items, such as roof boxes and cycle carriers. ”
McDonald, who is leaving to head up Marks & Spencer’s clothing business, said Halfords had not seen a weakening of consumer confidence and flagged a growing car maintenance opportunity, as motorists switched from “do it yourself” to “do it for me”.
She added: “Cars are becoming more complex and customers increasingly need support for small as well as large maintenance jobs.”
She said 80 per cent of its retail customers want advice or service with their purchase, while three quarters of UK consumers “have low or medium expertise in car DIY and are more inclined to pay for someone else to do it for them.”
Car maintenance revenues were driven 3.1 per cent higher by the fitting and sale of bulbs, blades and batteries, but car enhancement like-for-like sales were down 2.8 per cent as strong growth in dash cams failed to offset falling sat nav demand.
Like-for-like cycling sales were up 5.1 per cent, as its Cycle Republic, Tredz and Wheelies businesses performed well. Shares rose 11½p to 370¼p.
McDonald said: “We are entering a challenging period, with uncertainty over consumer spending and sterling depreciation, but we approach this on the front foot and a position of strength as…