Halfords has recorded a strong first half sales rise with growth at the motoring and cycling services chain led by essential services, but the company cautioned that trading patterns have been volatile.
Shares in Halfords plunged 18% this morning as the group saw cost conscious shoppers cut back on big-ticket purchases such as expensive bikes and tool kits.
The company, which operates close to 400 stores and 645 garages, recorded strong revenue growth in the first half to September 29, up 13.9% to £873.5 million, helped by demand for essential services such as MOTs and repairs.
But like for like growth was slower and the cycling division recorded a 2.8% comparable revenue decline. Unfavourable weather conditions and people trimming discretionary spend did not help, but it was a less steep fall than the wider market saw.
Pre-tax profit improved 3.3% to £19.3 million, helped by cost savings achieved through negotiating some property lease and freight costs.
Halfords, led by Graham Stapleton, expects full-year underlying pre-tax profits to fall within a narrower range of £48 million to £53 million. It previously guided between £48 million and £58 million.
The shares fell 41.2p to 187.4p.
Stapleton pointed out that Halfords had market share gains in all categories and told the Evening Standard there was a good response to Black Friday deals.
The firm’s motoring loyalty club which offers discounts and other services, is also proving popular: there are now almost 3 million members.
The chief executive said: “Despite the challenging and volatile trading environment and slower than expected recovery in some of our markets, we have made a good start to the year, with substantial sales and profit growth, and increased market share across the business. At the same time, we supported our customers through the ongoing cost of living crisis by delivering great value – when they need it most.”
He did not comment on a report from The Telegraph earlier this month that van rental firm Redde Northgate has made a £1.4bn merger approach for the group but discussions were abandoned because of disagreements over price.
In a separate update, Halfords said it has launched the second phase of its Dealer or No Dealer campaign which is designed to encourage car owners to exercise their right to choose where they get their vehicles serviced and repaired.
The latest part is targeting some 6.8 million drivers whose vehicles are out of warranty but who still use dealerships for servicing. According to the retailer’s research, motorists could save almost £400 million if they stopped using dealerships for servicing once their warranty has expired.
Stapleton said: “People have every right to use a dealer for servicing if they wish, but it’s important they do so out of choice, not because they believe they are under an obligation.”
