Halfords’ profits have declined across the year as a result of a “very tough” market, with the retailer citing previously that increased participation in price promotions had negatively impacted its margins.

As a result, it downgraded its profit expectations for its financial year in February from between £48m and £53m to £35m and £40m.

Halfords has doubled down on customer retention towards the back end of its financial year. The cycling and motoring retailer has grown its Motoring Loyalty Club to 3.4 million people, doubling its membership since last year and increasing by almost a million in the past six months alone.

This has helped to drive the number of members purchasing across both retail and auto centres, which was up one percentage point to 16% in FY24 and four times higher among members than non-members. Members also visited twice as frequently as non-members.

The company also beat expectations for its premium membership sign-ups, which increased from 0.6% to 8%.

Despite a rise in loyalty members, the retailer reported an underlying pre-tax profit of £36.1m for the year ended 29 March, down 18.3% from the year before.

Halfords: Loyalty scheme is driving more profitable transactions

The company cited low consumer confidence around big-ticket purchases, poor weather and an increase in promotional activity as reasons for the decline in profits, particularly in its cycling business, which declined in like-for-like revenue by 2.8%.

GlobalData retail analyst Sophie Mitchell says the company’s cycling business continues to be a “challenging segment” for the retailer.

“Although promotional activity damages margins, with Halfords stating that promotional participation increased by 33% year on year in H2 and more customers are purchasing on credit, it may be the only way to entice consumers to purchase bikes in the current economy,” Mitchell adds.

However, its online cycling business Tredz delivered like for like sales growth of 11.1%. Earlier this year, a new website was launched to “improve the customer journey and online conversion rate”.

Across the business, revenue was up 7.9%, largely driven by its auto centre business, which increased by 17.6%.

Additionally, 40% of MOTs in its auto centres came through the members of its loyalty club. However, Halfords expects its marketing spend on MOTs to reduce by 35% as it focuses on driving customers in-store through the programme.