UK: Cycles endorsed by Victoria Pendleton and Chris Boardman help drive upturn in sales at Halfords
- Credit: PA
Britain’s cycling heroes helped Halfords notch up a much-needed sales boost today as it attempts to get back on track after a dire performance last year which saw profits plunge.
A better-than-expected 8.8% increase in retail sales at the bicycle and car parts business was fuelled by a 15.5% jump in cycle sales, with brands endorsed by Chris Boardman and Victoria Pendleton contributing towards the improvement.
A rise in revenues for the 13 weeks to the end of June was widely expected, given the comparison with a washout quarter last year when rain saw cycling sales dip by 9.9%, but still cheered analysts who had been expecting a more modest 4% increase. Shares opened more than 10% higher today.
Matt Davies, the former Pets at Home boss hired last year to revive the fortunes of Halfords, admitted the figures were up against a weak comparative period. He said plans to overhaul stores were still in the early stages.
Overall like-for-like revenues were up 7.5%, with a 0.9% fall in performance for the company’s autocentres dragging on the rise in retail.
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Within cycling, all areas were up on last year with cycle repair increasing 32.1%. Halfords said it had also made available a broader offer of parts, accessories and clothing online.
The company said premium bicycle ranges led by its own brand Carrera and exclusive Boardman range did especially well with sales up 22.8%.
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It also pointed to increasing participation among women as the launch of a new traditional-style women’s bicycle in the quarter helped its Pendleton range to a 70% increase year-on-year.
In other areas of the retail business, car maintenance was up 11.8% though technology fell.
The travel solutions division saw a fall of 1.9%, with better camping sales offset by a decline in revenues from child car seats.
Online retail increased by 15.5%, with cycling making up more than half of revenues. Online satnav sales grew 9.4%.
Analysts Investec cheered the trading update and increased its full-year expectations for pre-tax profits by 11% to £60.1million, maintaining a “buy” on shares.
In May, Halfords chief executive Mr Davies unveiled a £100m revamp to turn the business around, with plans to refresh tired-looking stores and improve customer service over the next three years.
But he has already warned it will not be a quick fix, with earnings unlikely to recover until 2016 after annual pre-tax profits fell from £92.2m to £72m in the last financial year.
Investors were also dealt a blow as Mr Davies slashed the dividend by more than a third to help pay for the investment programme.
Halfords has 466 stores in the UK and Ireland and 287 Autocentres, employing a total of 12,000 people.