Halfords profits soar by 24 per cent

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The Independent Online

David Wild, the chief executive of Halfords, admitted he is "nervous" about the economy in the first quarter of 2010, as the bike and car parts retailer's profits motored ahead in the first half.

He said: "We can certainly continue sales for the remainder of this quarter, but we are a bit more nervous about the first quarter of next year with VAT going up, unemployment rising and the impact of sterling on buying products from overseas." Halfords' pre-tax profits raced ahead by 24 per cent to £60.9m for the 26 weeks to 2 October, driven by strong underlying sales and tight cost controls. Underlying sales rose by 2.1 per cent in the second quarter, up from 1.3 per cent in the previous three months.

Its profits were also helped by strong sales of higher-margin premium bikes, notably the Boardman lines, developed by the Olympic champion Chris Boardman. "The average transaction value of bikes is up by 10 per cent," said Mr Wild. Halfords expects its Ben 10 bikes, based on the eponymous child's action hero, to be the best seller at Christmas.

Another boost for Halfords was its gross margin – the difference between the price paid for a product by a retailer and that it is sold for – which jumped by 190 basis points to 53.3 per cent over the half-year, boosted by tighter stock control down by 13 per cent over the half year.

Halfords said its website and "we fit" service, which installs products such as windscreen wipers for customers, made a "significant contribution" in the first half. Total sales at Halfords – which has 469 stores including outlets outside the UK in Ireland, Czech Republic and Poland – rose by 3.8 per cent to £425.1m. The retailer said it was raising its interim dividend by 20 per cent to 6p.