Halfords on track despite sales drop

Car parts and bicycles chain Halfords today said it remained on track to meet profit targets, despite a further slowdown in sales in recent weeks.

The group reported pre-tax profits of £49.1m (€58m) for the 26 weeks to September 26, an increase of 3.2% on a year earlier after efforts to boost margins offset a 1.1% decrease in like-for-like sales over the period.

Halfords said the period since the end of the half year had seen a further slowing in like-for-like sales, but stressed that it was still confident of delivering trading profits in line with expectations.

Chief executive David Wild said the core areas of Halfords' business were doing well in the current economic climate, particularly the car maintenance sector as it is needs driven and delivers higher than average margins.

He added the company worked hard to maintain market leadership in this category, with a typical Halfords store holding parts for over 90% of the cars in the UK.

The chain has also benefited from the migration of technology such as digital music and satellite navigation to the car.

But Halfords said the market proved more challenging during the half year, as continued volume growth was offset by the decision of the two biggest brands in the market to reduce their prices on new products.

In the leisure category, Halfords said the cycle market continued to enjoy a period of encouraging growth.

The group, which has 455 stores, including a number in Ireland, employs more than 10,000 staff and sells in excess of 10,000 different product lines. Own brands include Ripspeed for cars enhancement and Bikehut for cycles.

Freddie George, a retail analyst at Seymour Pierce stockbrokers, said today’s profits figure was slightly better than his forecast.

He added: “We will not be changing our 2008/9 ’top of the range’ pre-tax profit forecasts of £94.5m (€112m). The business is partly counter cyclical and the company is approaching easier comparatives in the third quarter.”