Halfords steered clear of the retail downturn again when it posted better-than-expected first-quarter profits, driven by a focus on costs and robust sales of car maintenance products.
However, the retailer posted overall like-for-like sale growth of just 0.2 per cent for the 13 weeks to 27 June, although it cited being up against tough comparable sales for the same period last year. While Halfords is not immune to the retail downturn, its average transaction value of £20, growing sales of bikes as customers embrace a healthier and greener lifestyle and essential spend on car maintenance gave it a degree of protection.
The retailer said that its car maintenance division, boosted by demand for products such as windscreen wipers, batteries and oil, has "continued to perform strongly, reflecting its inherent counter-seasonal and defensive characteristics". Helped by its favourable margin position and focus on cost control, the retailer said its first-half profits were ahead of its expectations, although it did not provide a profit number.
Nick Wharton, Halfords' fin-ance and joint managing director, said the performance "underlines Halfords' resilient and defensive proposition". He added: "While [we are] not immune to the ongoing challenging retail environment, our market-leading positions, extensive ranges and unique service proposition continue to provide us with confidence in delivering full-year earnings in line with our expectations."
He added: "There is no doubt the consumer is facing more pressures. But our business provides some good protection." Halfords said sales at its leisure division, which sells products such as bikes, child car seats and tents, continued to improve after a slow start to the quarter. Halfords accounts for one in every three bikes sold in the UK.
Halfords said group sales rose by 1.7 per cent over the 13 weeks. Adjusting for the absence of a full Easter during the quarter, total sales rose 3 per cent and like-for-likes inched up by 0.2 per cent.
Last month, Halfords said it had hired Wal-Mart and Tesco veteran David Wild as chief executive. Mr Wild, most recently Wal-Mart senior vice-president of new business development, will join Halfords on 4 August.
Credit Suisse analyst Assad Malic said: "Halfords in our view exhibits a more defensive product set than its peers with a mix of product categories playing to both discretionary and more needs-driven consumer spending categories."Reuse content