It seems like bikes are everywhere at the moment, especially in the capital as carbon-conscious commuters speed through the streets in their skin-tight lycra. So it may come as a surprise to learn that bike retailer Halfords actually posted a 2.1% fall in UK like-for-like sales during the three months to July 2. It's blaming this slump on faltering consumer confidence prior to the Election and the emergency budget, as well as the World Cup and distribution problems in China. But it may just be a bump in the road: the company’s still on track to deliver annual profits of about £136m...
It was a tricky start to the financial year for Halfords. The poor weather in April copped some of the blame (as it always does) as did the uncertainty ahead of the general election and the Budget – after all, it might not be the best idea to splash out on a fancy new bike when there are all kinds of austerity measures around the corner. The World Cup didn’t do much to boost sales either, as the company decided to delay its summer promotional campaigns until after it had finished. Slightly more worryingly, there was also some trouble with its supply chain in China, after distribution was affected by the Chinese New Year.
But it wasn’t bad news all round. Overall numbers were given a boost by the group’s new car servicing and repair arm, which helped push total group revenues up a healthy 9.6% year-on-year. Its new repair centres are in the process of being rebranded as ‘Halfords Autocentres’ after the company’s £73m acquisition of Nationwide Autocentres in February. Not only is this deal seemingly good for Halfords’ bottom line, but it could be good for out-of-work mechanics too: in addition to Nationwide's 225 sites, Halfords plans to open another 200 outlets, creating around 1,000 jobs. Halfords’ online sales are also faring pretty well, with sales up 70%.
Despite the flatter than expected sales, Halfords’ chief exec David Wild doesn’t seem overly concerned, saying that the company remains on track to meet full-year profit expectations. He even admitted that the company is keeping its eyes peeled for further suitable acquisition targets. The terrain can’t be that rough, then…
In today's bulletin:
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Halfords sales head downhill - but profits remain on track
Editor's blog: The lessons of Tony Hayward
Scardino hints at an exit as Pearson announces record profits