Halfords Group PLC (LON:HFD) is accelerating the plan to grow its higher-margin car services division, as weak consumer confidence continues to hit the retailer's revenues.
The bike and car parts stores group saw its like-for-like (LFL) sales fall by 2.4% to £582.7mln in the six months to the end of September, impacted by a 3.1% decline in sales at its retail division as weak consumer confidence hit its big-ticket discretionary product sales.
READ: Halfords sales cycle backwards on weak consumer confidence and poor summer weather
However, the firm saw progress at its burgeoning autocentres division, which grew its revenues by 2.1% to £82.7mln.
The company said its profit guidance remained unchanged for the full year, with underlying profit before tax to be expected between £50mln and £55mln, and its capital investment rising by £11mln to cover recent acqusitions.
Last year, Halfords announced a move to sideline retail in favour of its car services division, which now accounts for £1 in every £7's earned by the firm.
The group pointed out that autocentres strong 69% margins make it a more attractive growth prospect compared to the struggling retail division, which has margins hovering around the 47% mark.
Halfords has so far acquired Northern England and Scotland-based garage company McConechy's Tyre Service Limited and the assets of Tyres on the Drive for a combined consideration of £9.3mln, as well as agreeing to a buying alliance with European motor services firm Mobivia.
In today's statement, Halfords' chief executive officer, Graham Stapleton said: "Over the medium-term, we expect service-related sales to double as a percentage of Group sales and Autocentres to represent a materially larger proportion of Halfords' profits.
Stapleton added: “As a result, motoring will inevitably grow in focus for the Group. We are confident that this strategy will drive long-term sustainable growth."
Halfords' shares were up 1.1% at 154.20p in early trading on Thursday.