THE wettest April on record was yesterday blamed for a drop in sales at retail groups Halfords and Kingfisher, although both said they were confident that business would pick up this summer.
Car parts and leisure goods chain Halfords said sales since the start of its new financial year had been “very disappointing” as it unveiled a 26.6 per cent drop in full-year profits.
Poor weather has affected sales across the high street, exacerbating an already tough situation as shoppers cut back on spending due to subdued wages growth and high inflation.
Kingfisher, which owns the B&Q and Screwfix chains in the UK and France’s Castorama, said rain and the weak euro contributed to an 8.6 per cent fall in first-quarter retail profits to £160 million.
Like-for-like sales in the UK and Ireland fell 10.4 per cent to £1.1 billion, but the group said it remained confident of delivering a “solid” full-year result with the key summer season ahead.
Chief executive Ian Cheshire said: “When the sun’s come out we’ve been happy with the reaction so if we can combine a bit of sunshine, a positive Jubilee and lots of golds at the Olympics, we might have a slightly different feel-good factor.”
B&Q, which has 359 stores in the UK and Ireland, saw sales drop 8.9 per cent to £968m in the 13 weeks to 28 April, while profits declined 13.8 per cent to £65m.
Cheshire said: “We anticipated the first quarter would be challenging, compared with last year’s strong growth which was boosted by favourable spring weather and public holidays.
“But an extremely wet April this year in the UK and France compounded the difficulty, adversely impacting sales of outdoor and seasonal categories.”
His comments were echoed by Halfords chief executive David Wild, who said the group had not seen the usual seasonal demand for cycling and outdoor products since the end of March.
Wild added: “We believe some of these sales are deferred rather than cancelled, and we expect a stronger performance from these categories as the year progresses.”
He said the group is planning to create 1,000 jobs over the next three years, along with expanding its range of services and enhancing its online offering.
For the year to 31 March, the group reported pre-tax profits of £92.2m, down from £125.6m a year earlier, on sales 0.8 per cent lower at £863.1m.
Relaunched ranges helped its cycling sales increase by around 10 per cent in the last financial year, but sales of car maintenance products fell 4.5 per cent as motorists drove fewer miles and the mild winter reduced demand for cold weather products such as de-icers, screen wash and batteries.
Peel Hunt analyst John Stevenson cut his rating on Halfords shares to “sell” and said: “Our sell stance is not a reaction to current trading, rather a reflection of our concerns over the medium-term outlook.”
The board recommended a final dividend of 14p a share, unchanged from last year, which means the total dividend for the year remains steady at 22p.
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Tuesday 21 May 2013
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