High Street jitters grow as discounters thrive

Retailers today laid bare the pressures facing Britain’s High Streets, flagging up struggles with the weaker pound, rising costs and shaky consumer confidence.

Halfords’ sales rose 7% to £1.1 billion in the year ended in April, but pre-tax profits sank 10.5% to £71.4 million as sterling’s post-Referendum slide raised costs by £14 million. Most bicycles are bought in US dollars.

The chain said it had negotiated with suppliers and cut costs to mitigate the currency impact and early signs were “encouraging”. Raising prices for shoppers was a “last resort”.

Boss Jill McDonald, who will leave to run Marks & Spencer’s clothing business this autumn, said it had not yet seen any change in sentiment, but linked growing demand for roof racks and cycle carriers to an increase in Britons holidaying at home.

By contrast, discounter B&M said 5.4% growth in second-half same-store sales is the result of “uncertainty about the outlook”.

The Sir Terry Leahy-chaired retailer, which reported 19.4% growth in full-year sales to £2.4 billion, upped its UK store target from 850 to 950. “As the economic climate looks difficult it offers us great opportunity to take market share,” chief executive Simon Arora explained.

Pets at Home, which has come under pressure from competitors such as B&M, said services such as its vet practices helped lift full-year sales by 7.2%.

However, it has begun “repositioning” parts of its business by cutting prices, boss Ian Kellett said.

Price reductions and the pound’s slide will hit profitability this year, Pets added.