photo of Graham stapleton
Growth in services is a critical part of our strategy and our ability to provide these from approximately 900 fixed and mobile locations across the UK provides customers with a convenience unmatched by any other UK business.

Graham Stapleton

Chief Executive Officer

This has been another year of good progress against the backdrop of a retail market that was challenging even before the emergence of the COVID-19 pandemic..

2019/2020 highlights


Total Group sales which are service-related


Total Group sales from B2B channels


Growth of online sales

Our Annual Report and Accounts includes Alternative Performance Measures (APMs) which we believe provide readers with important additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is included here.

Operational Review

To aid comparability, all numbers shown are before adopting IFRS 16, before non-underlying items and on a 52-week basis, unless otherwise stated.


Over the full-year, Retail revenue of £950.6m was -2.3% below last year on a LFL basis. Week 52 of FY20 was materially impacted by COVID-19 and, as such, sales up to week 51 were better at -1.8% LFL.


Our market share continued to grow in core motoring categories against a backdrop of low consumer confidence and mild winter weather. Overall LFL sales declined -5.3% for the full-year and -4.4% up to week 51. We performed well in the more resilient and less discretionary categories such as 3Bs (bulbs, blades and batteries), which grew +2.4%, Child Safety products, which grew +9.1% as we gained share from weaker competitors, and Car Security, which was up +14%. As in Cycling, we continue to innovate, successfully introducing a 'weCheck' services offer into the proposition on a free and paid-for basis.


Cycling performed strongly in H2, resulting in +2.3% LFL growth for the year and three successive quarters of growth. Sales of E-bikes, which were up +45% year-on-year and accounted for nearly 20% of adult bikes, benefited from improved merchandising in stores and high customer demand. Adult Mechanical and Kids bikes also grew over the full-year. Our own-brand and exclusive ranges of electric bikes, mechanical bikes and scooters offer our customers unrivalled levels of choice and value and we continue to bring new and innovative products to the market. We are well positioned to serve the increasing demand for these products and, as the largest national provider of cycling services, we are also ready to support customers beyond their first purchase.

Retail Gross Margin

Retail gross margin increased by 20bps with strong progress across both Motoring and Cycling. In line with our strategy to improve Cycling profitability, gross margins increased +117bps versus last year, driven by significant improvements in adult bikes. In Motoring, gross margin was up +138bps year-on-year, helping to offset the adverse mix impact of lower Motoring sales. Our strong margin performance was driven by several factors, including buying efficiencies and better focussed promotions.

Retail Operating Costs

Retail operating costs were well managed and declined -1.5% year-on-year, before the impact of IFRS 16. This was the result of a sharp focus on operational efficiency and improved procurement discipline, the benefits of which more than offset important strategic investments and ongoing inflationary pressures such as national minimum wage increases.


Full-year Autocentres revenue was £191.8m, growing 18.8% year-on-year and +1.4% on a LFL basis. Autocentres was also subject to a material COVID-19 impact with sales up to week 51 stronger, at +2.2% LFL. The acquisitions of McConechy's and Tyres on the Drive during H2 provide a significant opportunity in the medium-term as we successfully integrate these businesses into the Group. The underlying business, excluding the acquisitions, increased EBIT by over 40% to £7.8m, the third consecutive year of strong profit growth. This reflects the development of an enhanced operating model which also led to a significant improvement in customer service scores.

Group Services

Group Services revenue, which comprises fitting and repair services and the associated product, grew +8.9%, representing 26% of Group sales in FY20. We continued to expand our range of services, adding weCheck and new cycle care services in Retail, trialling on-demand fitting in Autocentres, and expanding our Mobile Expert vans from 3 to 75. Growth in Services is a critical part of our strategy and our ability to provide these from approximately 900 fixed and mobile locations across the UK provides customers with a convenience unmatched by any other UK business.


Group online sales had another very strong year, with revenue growth of +17%, now accounting for 24% of Group sales in FY20. Growth was strong before and after the launch of our new Group web platform in February 2020, which provides customers with a vastly improved digital experience and, for the first time, gives them access to an integrated services offer across mobile, stores and garages through one website. The new web platform coped well with an unprecedented shift to online ordering during the COVID-19 lockdown, when physical store operations were severely curtailed. The importance of our store network, colleague expertise and services proposition continued to be evidenced by the strength of Click & Collect, with over 80% of orders placed on picked up in stores.


Group B2B sales grew 25% year-on-year and represented 15% of Group sales in FY20. In the past year we have focussed on developing deeper relationships with key strategic partners to support growth within our key markets. This has been supported by investment in our technology infrastructure to streamline key customer and client processes. We have also broadened our proposition range to expand our B2B offering within motoring services.

Progress on Strategy in FY20

To Inspire and Support a Lifetime of motoring and cycling

In November 2019 we announced an acceleration of our strategy 'To Inspire and Support a Lifetime of motoring and cycling'. We made significant progress against our strategic objectives in FY20, which laid strong foundations to support our response to COVID-19 and positioned us well for FY21 and beyond. Notable highlights include:

  • Our Group web platform launched as planned in Q4, transforming the digital customer experience and consolidating our broad services offer in one website.
  • We exited Cycle Republic and the Boardman Performance Centre, enabling us to focus investment on our higher-returning mainstream offer in Halfords and our performance cycling proposition in Tredz.
  • Continued development of our Halfords Mobile Expert proposition, delivering best-in-class customer service reflected by strong Trustpilot scores. The acquisition of Tyres on the Drive increased our mobile hub footprint from 1 to 7 and our van footprint from 3 to 75, providing a strong platform for future growth.
  • Acceleration of our growth in Autocentres through the acquisition of McConechy's Tyre Service Limited. Through this we acquired one of the UK's leading garage chains with 57 sites and 100 vans, establishing strong coverage in Scotland and the North of England.
  • Completed the upgrade of PACE, our digital operating platform, in all Autocentres garages. PACE enables a tablet to be put in the hands of every technician, providing customers with the assurance of quality and enabling our garages to optimise resource allocation and labour efficiency.
  • Delivered significant cost savings through supply chain efficiencies, Retail productivity programmes, property savings and improved procurement practices, and reduced Working Capital by £11m on average throughout FY20.
  • Strategic buying alliance agreed with Mobivia, a leading player in the European motoring products and services market. The relationship, in its early stages, is progressing well.

We made significant progress against our strategic objectives in FY20, which laid strong foundations to support our response to COVID-19 and positioned us well for FY21.

FY21 Strategy Focus

In November 2019 we announced an acceleration of our strategy, emphasising the importance of growing our motoring services and B2B businesses. The strategy remains absolutely the right direction for Halfords but, given the unprecedented impact of the COVID-19 pandemic, we are moderating our near-term plan. COVID-19 has materially changed the retail outlook for the coming months and has overshadowed Brexit as the emerging risk. We have therefore adjusted our short-term focus to reducing cost and working capital, ensuring our colleagues are engaged in the success of the business and, of particular importance, adapting quickly to new customer trends. We will continue to transform the business and develop our customer strategy in FY21, but we will put greater emphasis on responding to emerging trends and laying solid foundations for FY22. Our areas of focus in FY21 are:

  • A stronger emphasis on reducing the operating costs of the Group, including but not limited to:
  • the closure of up to 10% of the Group's physical estate, having already exited 22 Cycle Republic stores and 5 Halfords stores and garages so far this year
  • targeted rent reductions reflecting the current market dynamics
  • a review of all GNFR contracts and the tendering of several key agreements
  • revisiting the costs of our logistics network
  • Continuing to grow the profitability and returns of our core categories, particularly Cycling, through buying efficiencies, more targeted promotional campaigns and working capital reductions.
  • Developing our Halfords-branded customer proposition by continuing to transform our Group web platform and digital customer experience. In addition, we will invest in expanding our Services business, leveraging our financial services offer and growing our B2B channels.
  • Swiftly integrating the acquisitions of McConechy's and Tyres on the Drive, using our best-in-class technology across the Services offer.
  • Continuing to develop PACE, our digital operating platform in Autocentres, with a view to transferring best practice to services delivery in Retail and mobile vans.
  • Expanding our Mobile Expert vans to under-served parts of the UK, increasing our original target of 100 vans to a revised target of 120 vans by the end of FY21.
  • Upweighting investment in the engagement and development of our colleagues, ensuring they are strongly engaged in our transformation journey.

In FY21, we will be more focussed on delivering the most important initiatives that provide the quickest and most attractive returns, whilst building the underlying strength of the business for FY22 and beyond. As a consequence, we are planning for lower capital expenditure in FY21, which we now expect to be in the range of £20-30m. As trading conditions improve, however, we will seek to continue our transformation journey at pace, in line with the current strategy but adjusted for a new post-COVID-19 world.

Graham Stapleton

Chief Executive Officer

6 July 2020