Halfords has reported a 2.3% jump in like-for-like (LFL) sales in its latest annual results but warned that the impact from US tariffs could increase its costs in the next financial year.

The motoring and cycling products retailer also said the hike in national insurance employer contributions and changes to the minimum wage announced in the Budget last October will result in a £23m rise in direct labour cost in FY26.

However, Halfords did reveal that it mitigated more than £30m in cost savings against the impact of inflation in FY25, while it also said that a “continued working capital discipline” allowed it to close the year with net cash.

As a result, the retailer’s underlying group profit before tax came in at the upper end of its guided £32m to £37m range, covering the period in the year to 28 March.

In a separate announcement, Halfords also confirmed the appointment of Henry Birch as its new CEO, replacing the outgoing Graham Stapleton, who is leaving the group after seven years.

Stapleton said: “This is a performance to be proud of, mitigating more than £30m of inflation in what continued to be a very challenging trading environment in FY25.

“After seven years leading the transformation of Halfords from a cycling and motoring retailer to an omnichannel motoring services super-specialist, most recently brought to life through the Fusion programme, it is time for me to hand over the reins for the next phase of the business’ evolution. I wish Henry and the team all the best.”

Halfords said that for its Fusion programme, which integrates the group’s motoring services across local stores and garages, it had identified 150 garages as suitable for conversion into Fusion sites – including the locations delivered to date.

The retailer said it plans to “move quickly” to convert at least half of those remaining in FY26, with the rollout aiming to deliver “significant increases in sales and profitability”, it added.

Head of equity funds at Hargreaves Lansdown, Steve Clayton, commented: “Halfords has reported a strong end to its financial year, steering the market to expect an outcome toward the top of their previously guided £32m - £37m profit figure for the year just ended.

“Demand for tyres may have run flat, but the group raised sales in servicing, maintenance and repair in its autocentres, while LFL sales in both motoring and cycling turned positive toward the year end in the retail stores.

“The group’s cost-management plans offset over £30m of cost pressures in the year, but the group warns that it faces a £23m headwind in FY26 from the hike in national insurance charges for employers. Prices in stores and the autocentres look set to rise as a result and the group flags that while it does not trade directly with the US, its supply chain may face tariff impacts.”

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