Half year report, discussion of impact of Brexit, exchange rate, consumer confidence

Halfords Group plc – Half year report – 27 September 2019

Industry: retail

Chief Financial Officer’s Report (extract)
Brexit and impact of movements in foreign currency exchange rates
At the date of finalising this report, there remains considerable uncertainty around the timing and nature of the UK’s exit from the European Union. We have prepared for a “no deal”, however, there is corresponding uncertainty around the impact on the Halfords Group.

1) Impact on exchange rates. The Group buys a significant proportion of its goods in US dollars; between $200m and $300m a year. As previously guided, the majority of our US dollar sourcing is for cycling products.

2) Prolonged uncertainty over exit terms and continued weakness in Sterling could lead to a slowdown in the UK economy and, consequently, a further weakening of consumer confidence, impacting trading conditions for the Group. Working groups have been held throughout the year to identify, assess and implement mitigations for the risks of a “no deal” Brexit. However, Halfords has strong positions in fragmented Motoring and Cycling markets, and a service-led offer that differentiates us from our competitors, through both physical stores and online.