Like-for-like (LFL) bicycle sales at automotive and leisure products retailer Halfords were down 16 per cent year-on-year in the 13 weeks to December 31st 2010, according to an interim management statement published today.
The company attributed the reduction in revenue from this part of its business to fewer children receiving bikes as Christmas presents and a temporary slowdown in Cycle-to-Work sales.
Group revenues increased by 3.5 per cent during the quarter compared to the same three months the previous year, but this was mainly due to the growth in the company’s Autocentres business, which was acquired in February.
Retail sales decreased by 6.6 per cent on a LFL basis, meaning they are now down 5.2 per cent for the year-to-date.
Demand for car maintenance and the fitting of bulbs, blades & batteries was strong, however, growing by 12 and 29 per cent respectively on a yearly comparison.
Unlike many retailers that have announced results this week, the cold weather in December was not used as an excuse for Halfords’ sales slump, as the big freeze’s impact on cars can actually boost trade at the company’s motoring arms.
Commenting on the results, Halfords CEO David Wild inevitably focused on the encouraging growth in the motoring services division of the group.
“The strong performance from our car maintenance category and the positive sales in our Autocentres demonstrates how customers recognise Halfords as the destination for their motoring needs,” he explained.
“We are building on this momentum and with the launch of our 240 re-branded Halfords Autocentres this spring we will be uniquely positioned to develop our business further in the car-servicing sector.”
And although he acknowledged bike sales were weaker than previous Christmases, Wild is confident that the “strong” Halfords brand can help the retailer continue to deliver “long-term sustainable earnings growth”.
Meanwhile investment experts are cautious about the company’s profit expectations for the full year to April 1st 2011, saying the reduction in bike sales was “unexpected”.
A report compiled by Investec Securities retail analysts Katharine Wynne and David Jeary noted: “Adverse weather and a shift in gifting preferences away from children’s bikes have combined to deliver a worse than expected LFL sales decline within Halfords Retail.
“Despite a reassuring firming of Autocentre LFL sales to +1.6 per cent, the group Q3 LFL declined by 5.2 per cent.
“With an assumption of five per cent LFL sales decline in Retail in Q4 and maintained guidance of broadly flat gross margins for the year, management has guided FY11E profit before tax expectations to the bottom of the current range (£127 million-£135 million).