October 4, 2012 / 10:00 AM / 5 years ago

Halfords sales recover on summer cycling success

LONDON (Reuters) - Britons inspired by Bradley Wiggins’ Tour De France victory and the national team’s Olympic success snapped up Halfords’ bicycles in the summer, helping the retailer recover some of the ground lost in the spring.

The bicycles-to-car-parts group was hit by poor weather earlier this year, with the wettest April and June since records began exacerbating an already tough situation for Britain’s retailers as shoppers face tight budgets and rising prices.

Halfords, which appointed Matt Davies as chief executive on Wednesday, said second-quarter sales at stores open over a year rose 5.6 percent, clawing back some of the earlier loss and resulting in a fall of 0.1 percent for the 26 weeks to September 28.

“We benefited from the weather being better in Q2 and we were buoyed by the Tour de France and Olympics successes,” chairman Dennis Millard told reporters on Thursday.

Cycling was the stand-out performer, commercial director Paul McClenaghan said, with like-for-like sales growth of 14.7 percent in the quarter.

“We were particularly pleased with sales of our Pendleton and Boardman bikes, both are designed by Olympic gold medalists and the range has resonated strongly with customers during the period,” he said.

Shares in the group rose as much as 16 percent to a six-month high after the numbers soundly beat market expectations. They were trading 13.5 percent higher at 302 pence by 5.03 a.m. EDT, the best performing mid-cap stock.

Panmure Gordon analysts said the company had gone from reverse to full steam ahead in one quarter.

“While perhaps some of the improvement is a one-off, the new chief executive has a stronger platform than he might have expected as he starts his first day,” they said.

Seymour Pierce’s retail analyst Kate Calvert, meanwhile, hailed the arrival of Davies, previously boss of pets retailer Pets at Home.

She said it was an “excellent” appointment, given the reputation for service at Pets and the growth of the business from 140 to more than 300 stores under his tenure.

Halfords’ strong second-quarter trading contrasted with a first quarter decline of 5.6 percent and a profit warning that prompted the departure of then CEO David Wild.

Second-quarter like-for-like sales at its retail business were up 4.6 percent, while they rose 12.4 percent at its Autocenters car servicing operation, which it said was the strongest growth since it acquired the business in 2010.

The company, which trades from about 460 Halfords stores and 260 Autocenters, said that given the recovery in sales, it expected first-half pretax profit to be 40-42 million pounds.

Millard said the group’s full-year pretax profit would now be in the upper half of the previously-stated range of 62-70 million pounds, below the 92.2 million pounds ($148.19 million)it posted for the year to March 2012.

Despite the strong summer trading, he did not raise the top of the range, saying he remained cautious about the remainder of the year given the pressure on the British consumer’s purse.

Winter trading at Halfords is also partly dependent on the weather because colder conditions drive sales of auto accessories like batteries, screenwash and antifreeze, he said. ($1 = 0.6222 British pounds)

Editing by Kate Holton and Helen Massy-Beresford

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