Halfords profits forecasts reined back

By This Is Money
Updated: 05:48 EDT, 7 April 2011

Halfords warned profits would be hit as a rebound in bicycle sales was overshadowed by a poor performance in car maintenance.

Halfords: 464 stores in the UK and Ireland

Same-store cycle sales returned to growth, up 8.7% in the 13 weeks to April 1, after slumping 16% over the festive season.

But car maintenance sales, such as car parts, workshop tools and body repair, fell 11.7% on a like-for-like basis in the period - though this was against tough comparatives for winter last year.

The group said it now expected full year pre-tax profits to be between £124m and £127m, down from a previous range of £127m to £135m. Last year, the company reported pre-tax profits of £109.7m.

Halfords, which has 464 stores in the UK and Ireland, said in the year to April 1 car maintenance sales managed to grow 0.6% on a like-for-like basis, but car enhancement, such as sat-navs and stereos, declined 12.3%.

Total retail, which also includes bike sales, was down 5.5% on a same-store basis.

The group said the bounceback in cycle sales in the fourth quarter came across the entire range, including children's bikes and premium models.

Its Halfords Autocentres business is expected to turn in operating profits of £7m but this is around £2m lower than expected at the time of the acquisition in February last year.

Looking further ahead, chief executive David Wild said trade would continue to be difficult.

'It's a very uncertain environment,' Mr Wild said. 'We have to trade the business as hard as we can. When there will be a recovery in consumer spending it's difficult to call.'

Halfords said it hoped to continue the momentum in cycle sales in the new financial year, with the re-launch of its premium range. The company has also begun a new marketing campaign under the strapline 'That's Helpful, That's Halfords'. While the group could offer no profit guidance for the financial year ending in 2012, it did warn cost pressures were likely to increase. Payroll, energy and occupancy will all boost the overall cost base.

Kate Calvert, an analyst at Seymour Pierce stockbrokers, said she expects pre-tax profits forecasts for the new financial year to come down from £135.1m to below £120m.