Halfords Group's logistics ambitions dampened by high fuel costs

Halfords has admitted its logistics efficiency ambitions were dampened by inflationary pressures on fuel and dual running costs associated with the opening of its new DC.

The bicycle and motor parts retailer says it slightly reduced its warehousing and distribution costs to £27.5m in the year to 1 April, from £27.8m the previous financial year, thanks to a revamp of its supply chain.

However, the firm says improvements in efficiency - which it expected to achieve by moving to a central automated 320,000ft2 DC in Coventry last July - have not happened as quickly as anticipated.

Halfords claims the new DC will achieve annual savings of £4m from 2011, and cut two million road miles a year.

"Improvements in efficiency took longer than expected to deliver, and were further compounded by a combination of record winter volumes, inflationary pressures on fuel, and dual running costs to ensure that availability was maintained in store during the transition period," Halfords said today in its preliminary results for the 12 months to 1 April.

Meanwhile, group revenue rose 4.6% to £869.7m during the period and underlying pre-tax profit jumped 7.2% to £125.6m.