Halfords, the UK’s leading provider of motoring and cycling products and services, has secured £25 million of additional funding from its existing lending syndicate as part of the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
The news comes on the day the Redditch-headquartered retailer reported underlying profit before tax of £55.9 million. In retail overall sales were down 2.7 per cent on last year, with a strong cycling performance not fully offsetting a tough market for motoring products.
The funding, which was equally split between HSBC UK and two other high street banks, will support the business as it continues to navigate Covid-19 and provide vital services to help keep people moving by car and bike.
As an essential retailer, most of Halfords’ 800+ stores and garages across the country remained open during lockdown, giving customers access to bikes, car repairs, and other important products and services. With more stores now opening up with social distancing measures in place, this important funding will ensure Halfords can continue to trade confidently over the coming months.
Revenue at Halford’s Autocentres revenue grew 18.8 per cent last year, boosted by the acquisitions of McConechy’s and Tyres on the Drive (“ToTD”) in the second half of the year.
Loraine Woodhouse, Chief Financial Officer at Halfords, said: “While our market-leading motoring and cycling businesses have strong macro tailwinds, this additional contingency funding gives us even greater confidence in our ability to trade our way successfully through the current uncertain environment. We would like to thank our lenders for their ongoing support.”
Akhil Shah, Relationship Director at HSBC UK, added: “Halfords has played a particularly important role in keeping the country moving in recent months. However, like all retailers, the business has faced unprecedented challenges. As the lockdown restrictions ease and more of its stores open, this additional funding gives Halfords the confidence and the headroom to continue serving its customers effectively.”
Commenting on Halford’s annual results, Graham Stapleton, Chief Executive Officer, said: “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. We are particularly pleased to have delivered strong revenue growth in Group Services (+9%), Online (+17%) and B2B (+25%), which are our main areas of strategic focus. Our Autocentres business grew strongly, boosted by the acquisitions of both McConechy’s and Tyres on the Drive, and more broadly in motoring services we expanded our fleet of Mobile Expert vans from 3 to 75. This was particularly timely given strong demand for at-home services.
“The start of the current financial year has of course been dominated by the impact of COVID-19, and our status as an essential retailer was a clear endorsement of the wider role that Halfords has to play in keeping the UK moving. Having responded quickly and decisively to cater for the surge in popularity of cycling during lockdown, we are now seeing increased demand for motoring services and products as people start using their cars regularly again having not done so for the last few months.
“Despite the wider uncertainty caused by COVID-19, we remain confident in the long-term prospects for Halfords given the strong macro tailwinds within our market-leading Motoring and Cycling businesses. The strong progress we have made in FY20 and in the first quarter of FY21 has been made possible by the hard work and dedication of our thousands of colleagues, who I am proud to work alongside”.