LONDON (Reuters) - British bicycles to car parts retailer Halfords (L:HFD) reported a 12 percent fall in first half profit, with margins dented by a weaker pound in the wake of the Brexit vote, more promotional activity and increased investment.
For the 26 weeks to Sept. 30 the firm made an underlying pretax profit of 40.8 million pounds, down from 46.4 million pounds in the same period last year, despite a 6.3 percent rise in total revenue to 567.3 million pounds.
Retail gross margin fell 275 basis points to 47.6 percent.
Halfords forecast full year profit in line with market expectations.
A weaker pound since June's Brexit vote has raised Halfords' sourcing costs. But the firm has also said it could benefit from the country's vote to leave the European Union if the fall in sterling means more Britons opt to holiday in the UK rather than overseas.
The firm said its average hedged U.S. dollar rate declined from $1.56 to $1.46, accounting for circa 100 basis points of gross margin in the first half. It said cycling promotional activity during the summer was also deeper than last year.
Shares in Halfords, down 22 percent over the last year, closed on Wednesday at 343.7 pence, valuing the business at 672 million pounds.