Halfords expects profits rise but will it buck store closure trend?

This week Halfords is expected to post a rise in pre-tax profits by around eight per cent, however reports have suggested that new boss Jill McDonald may eventually consider slimming the store portfolio down.

A report in the weekend’s Observer noted the possibility, quoting Investec which questioned "whether 465 stores really is appropriate for a multi-channel retailer". Meanwhile The Times said McDonald is set to face "stiff examination" over the size of the store portfolio.

The suggestion may seem at odds with the retailer looking forward to a set of good financials and particularly contradictory to those plans to grow the Cycle Republic spin-off stores.

However, supermarkets are famously keen to cut back on their large out of town square footage with the advent of internet deliveries (among other reasons). Halfords is no supermarket, but it does have a significant out of town retail park square footage and has been investing heavily in its online presence, hailing the introduction of thousands of new lines available through Halfords.com as well as its all-important click and collect offering.

With the growth of Cycle Republic (the fifth store opened at the weekend) all the signs indicate that if Halfords is mulling over the possibility of shutting any stores then it clearly is in no rush. And maybe it could re-purpose smaller Halfords stores into Cycle Republic outlets?

Perhaps the Tesco comparison is not such a stretch, with the supermarket closing larger retail park stores and concentrating on smaller Express stores. Are Cycle Republic openings paving the way for a similar move for Halfords? Industry eyes will no doubt be examining this week’s financial statement in detaill, which may yet provide some indication of Halfords’ plans for its store portfolio.