The economic downturn looks set to strike another big High Street name this week amid claims that Halfords is set to cut a quarter of its head office staff.
Following the fall from grace last week of Woolworths and MFI, the Worcestershire company, which employees 10,500 people across 450 UK stores, said it was “reviewing all the activities” carried out at its Redditch office and confirmed they were currently in the process of major restructuring.
But bosses would not comment directly on rumours that up to 25 percent of staff at the Redditch headquarters were at risk of losing their jobs, saying only that the review process could result in a “reduction of roles”.
The huge hub, on Icknield Street Drive, Redditch, employs a total of 650 workers who are responsible for the operation of their stores across the country.
It is not yet clear if the review process will filter down the chain and affect it’s distribution centres, although some warehouse workers are already reporting a drop in working hours.
A spokesman for Halfords said: “Over the coming weeks, we will be reviewing all the activities carried out in the Redditch office and this process may result in a reduction of roles.
“Store colleagues are already working through an exercise to realign roles and working patterns.
“We always strive to keep the impact on colleagues to a minimum and we will be consulting with all colleagues on proposed changes.”
In a week that saw Woolworths and MFI go into administration, the company blamed the current economic downturn for the possibility of job losses.
A spokesman said that the review of how the company worked was vital to it’s future.
“The current economic downturn is heavily impacting upon the British retail market and in order to create a platform for growth in this tough trading environment we must review those activities within the business that can be carried out more effectively,” the spokesman added.
The news will come as a shock to many workers after Halfords’ first half figured showed an encouraging performance, especially in cycles.
The chain’s like-for-like sales were 1.1 percent lower overall, but ahead in leisure, the category in which cycling sits.
The fact that Halfords sponsors Nicole Cooke, the Beijing gold medal-winner, together with the secular growth in cycling on health and environmental grounds, has seen thousands of commuters invest in bicycles.
The broader encouragement was that, despite a faltering top line, Halfords’ bottom line has been bolstered by cost controls and gross margin gains, so that pre-tax profits were three percent ahead, and still on track to meet full-year forecasts.
The Redditch group reported pre-tax profits of £49.1million for the 26 weeks to September 26 despite the slow down over the past two weeks.
Traditionally, Halfords does extremely well in the build up to Christmas and sees a huge rise in children’s bicycle sales.
Despite a drop in VAT it is not yet clear if seasonal sales will remain unaffected or if the credit crunch will stop families investing
Halfords currently has £174 million of net debt and expects trading to get tougher in the first quarter of 2009.