The car parts, bikes and camping retailer said pre-tax profits fell 10.5% to £71.4m for the year to March.
Revenue was up 7.2% to nearly £1.1bn, boosted by the acquisition of upmarket bike business Tredz/Wheelies. Like-for-like revenues rose 2.7%.
Chief executive Jill McDonald said Halfords had gained market share in both motoring and cycling.
"Profit performance for the year was impacted by the weaker pound but our plans are well developed and I am confident this will be offset over time," she said.
It is the last set of results to be presented by Ms McDonald before she joins Marks & Spencer as head of non-food in September.
Chairman Dennis Millard said Ms McDonald was leaving a "strong team and a clear direction to drive future growth".
Halfords said higher import costs had largely been responsible for the drop in profits.
It said a late Easter knocked recent sales, revealing a 1.2% drop in like-for-like retail sales in the final three months of its financial year.
Taking the 15 weeks to 28 April 2017, which includes Easter, it said like-for-like sales were 3.9% higher.
Ms McDonald said the company was in a "position of strength" despite "uncertainty" about consumer spending due to rising inflation.
Neil Wilson, senior market analyst at ETX Capital, said the focus on premium cycling brands was working, buoyed by the fact Halfords expects growth in cycling of 3-5% per annum in the medium term.
"Looking ahead there are hopes that the retailer will actually benefit from the weak pound as more people stay in Britain for holidays.
"Staycations might help, as will the focus on higher value bikes. Investors should also note that the worst of the fall in sterling may be over."
Shares rose 1.2% in early trading to 363p, valuing the company at just over £720m.
Annual profits at Halfords have been hit by the weak pound despite a strong rise in sales.