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Halfords LFLs dip despite growth in bike sales

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Bike and car parts retailer Halfords saw like-for-like retail sales fall 1.1 per cent year-on-year in the 13 weeks to July 1st 2011 in difficult trading conditions, it was announced today.

In what was the company’s first quarter of the new financial year, car maintenance and car enhancement trading dropped 2.8 and 10.6 per cent respectively but sales of leisure products such as its cycle range jumped 6.3 per cent.

A marketing campaign, which included a number of promotions and the launch of a new advertising drive containing the tagline “that’s helpful, that’s Halfords’, ensured the company recorded a gross profit for the period and helped boost sales of premium bike brands such as Boardman, Voodoo and Carrera.

Halfords multichannel platforms seem to be performing well, with retail online sales growing 9.2 per cent year-on-year and 86.7 per cent of items ordered via the internet were collected in store.

The group continues to make investments in margin to maximise profits and this combined with strong sales of lower margin ranges is expected to result in a gross margin decline of at least 100 basis points for the full year.

David Wild, CEO of the retailer, remains hopeful for the year ahead though, and said: “Halfords is continuing to trade effectively in a difficult environment for UK consumers.

“Our response to the economic challenges is a clear trading strategy that offers value through great prices, quality, innovative products and expert service. The results can be seen most clearly in our strong cycling sales, where customers have responded favourably to our promotions and new products.”

Revenues at Halfords’ Autocentres business grew 2.1 per cent year-on-year during Q1, and today’s statement indicated that the company is “gaining traction” in the car servicing field and is set to promote this area of the group further in the months ahead.

The company unveiled 240 re-branded Autocentres in March a year after they were acquired from Nationwide Autocentres the previous year.

“The positive trend in sales has been achieved at a difficult time for motorists when they are reducing mileage,” Wild explained.

“It demonstrates the strength of our proposition and the potential for the Halfords brand to grow in the garage-servicing sector.”

To date, the retailer has purchased 8.4 million shares for £32.4 million at an average price of 385.9p per share through a share buyback programme which commenced on April 7th 2011.

Wild added: “We remain confident in the cash generation capabilities of the business and with the combination of recommended dividend payments for FY11 together with the share buyback, we will return a total of £120 million to shareholders.”

Published on Thursday 21 July by Editorial Assistant

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