Halfords profits motor ahead but cycle sales dented

Profits at car parts and cycle retailer Halfords have inched forward as the group's turnaround under chief executive Jill McDonald rolls on.

Laura Trott is to roll out an exclusive bike range with Halfords. Picture: Jane Barlow

Results revealed that full-year profit before tax rose 0.5 per cent to £81.5 million, once adjustments for the previous year’s 53-week period had been factored in.

Group revenues grew 1.7 per cent to just over £1 billion and like-for-like sales increased 1.5 per cent over the year. There was a 2.5 per cent rise in revenues at the firm’s Autocentres business.

McDonald said: “This was a solid performance and we gained market share in both our motoring and cycling divisions.

“In cycling our sales improved in the second half of the year and cycle repair delivered good growth. The Moving Up A Gear strategy aimed at driving sustainable long-term growth is developing well.”

Halfords also announced the launch of an exclusive bike range from double Olympic gold medallist Laura Trott. It is the latest initiative aimed at driving bike sales following a slump during its peak summer trading period last year.

Like-for-like sales in cycling over the year dipped 0.9 per cent as the group flagged “weaker market conditions” in the category.

Last month, Halfords splashed out £18.4m to acquire online company Tredz, along with Wheelies, the UK’s largest provider of bicycle replacement for insurance companies.

The group proposed a full-year dividend of 17p per share – an increase of 3 per cent on last time.

Tony Shiret, analyst at Haitong, said: “Halfords is… clearly not seeing much strength in the cycle market just now. But underlying growth characteristics in the UK motor market remain encouraging.

“Much investment has already been made in improving customer service by up-skilling the workforce and this also continues. This is how this type of business, with potential for service and adjacent product-related sales increments, should develop. This said, theory and execution are not always the same.”

Hargreaves Lansdown analyst George Salmon said: “Halfords is increasing its cycling celebrity endorsed brands, hoping that Rio 2016 will bring something similar to the ‘Wiggo effect’ on cycling’s popularity following London 2012.

“With a 24 per cent market share in cycling and leadership in many of its markets, you would expect Halfords to be generating better than what they describe as a ‘solid performance’. Cycling was impacted by weaker market conditions.”