Halfords could raise prices for car servicing and repair to help it cope with a £23m cost increase after the autumn budget, and called for more business support from the government.
The cycling and motoring retailer, which has more than 12,000 employees, reported on Tuesday that the budget measures add £23m of direct labour costs, of which £9m was already included in its planning assumptions.
Graham Stapleton, the chief executive, said: “The cost implications from the recent UK budget are particularly acute for a specialist retailer that provides expert advice and assistance to customers, face to face.”
He urged the government to consider other ways of supporting businesses, including the acceleration of apprenticeship levy reform, which would help the company to upskill existing staff and offset some of the cost rises.
Halfords said it would find it easier to pass on increased costs to customers in its “more needs-based Autocentres servicing business, where pricing power is greater”, although it is also considering other ways of keeping costs down.
The effect of the budget on consumer behaviour was unclear, the company added.
The chancellor, Rachel Reeves, defended her £40bn of tax rises to increase public spending at the CBI business group’s annual conference on Monday, saying there were “no alternatives”. Businesses bore the brunt of the measures, with increases to employer national insurance contributions and a rise in the national minimum wage from April.
Halfords reported revenues of £864.8m for the six months to 27 September, down 0.1% at outlets open at least a year. It made a profit before tax of £17.8m, down 23% from a year earlier.
Also on Tuesday, the online electronics retailer AO World said the budget would result in £4m additional direct costs. Including indirect costs, the impact is likely to be more than £8m.
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It reported a 6% rise in revenues to £512m in the half year to 30 September, and an adjusted pre-tax profit of £17m, up 30%. It said the summer had been “tough” when prices were cut and there was weaker demand for cooling products than a year earlier.
The AO World chief executive, John Roberts, said: “We’ve had a Morecambe and Wise summer sales period; all the right volumes just not in the right categories. The wet summer weather meant we sold fewer fridges and air conditioning units and more tumble driers than we had planned.”
