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The Budget increase in employer National Insurance contributions may force Halfords to up the cost of car repairs at its network of Autocentres.
It said changes to the National Minimum Wage and the increased NI costs will add £23m to its direct labour costs in the 2026 financial year. The company has 12,000 employees.
It added that there may be further inflation in the cost of managed services as a result of the measures announced in the UK Budget.
“The effect of the UK Budget on consumer behaviour and hence the trajectory of our end-markets is unclear.
“We have a greater ability to mitigate headwinds in the more needs-based Autocentres servicing business, where pricing power is greater.
In the six months to 27 September, Autocentres (ex-Avayler) delivered underlying EBIT of £9.1m compared to £11.4m last time as challenges in the tyre market and wage inflation. Turnover fell -2.3% to £348.7m.
Halfords CEO Graham Stapleton said: “I am really pleased with the progress we have delivered in the first half. Against ongoing headwinds, we have continued to focus on controlling the controllables, with a disciplined approach to cost and margin optimisation.
“We are particularly excited by the outstanding results we are seeing from our Fusion Motoring Services programme, which creates a stronger connection between our Retail stores and Autocentres in a town to fulfil all our customers’ motoring needs.
“Now live across 22 locations, these motoring services locations are delivering phenomenal returns with a significant uplift in both sales and profit. Given the strength of these results, we are now targeting 40 Fusion sites this year.”