Halfords Suffers a Mixed Performance in the First Quarter

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Automotive and cycling retailer Halfords Group (LSE:HFD) released its quarterly results today, announcing that sales were down 2.3% compared to the first quarter of 2011.

The company attributes a slip in consumer demand within the automotive sector due to a particularly warm winter, when the retailer usually sees increased sales of replacement parts due to nasty weather, as well as persistently high oil prices, and the overall lack of consumer confidence.

Many consumers have chosen to neglect their car’s maintenance in an option as to save money given the current economic turmoil. “Customers are putting if off,” said Halfords CEO David Wild, “and in some cases they are making a mistake, because if you maintain your car, that reduces your fuel consumption.”

While the retailer has been disappointed with performance in its automotive division, the same cannot be said for its cycling business, thanks in part to many Brits frustrated with high petrol prices swapping their cars for bicycles. Sales in the company’s leisure division, which accounts for bicycle sales, were up 5% from this time last year. Furthermore, Halfords believes sales in this sector will only go up, especially with strong public interest in Team GB heading into this summer’s Olympics.

For the year, the Board of Directors predicts pre-tax profits between £90m and £93m from revenues of £861m, down from revenues of £870m from the prior year.

Executive Commentary

Halfords CEO David Wild:

“We have seen a decline in the discretionary side of car spending. Our online performance is a little disappointing, reflecting a decline in sales of satellite navigation systems and children’s car seats. We anticipate the UK consumer environment to be challenging, especially as fuel costs continue to rise.”

“The strong performance from our growth areas provides an attractive route to strengthen our business. We are investing to drive our strong brand even further by developing our fitting resources, increasing marketing and enhancing our multichannel offer. Investing in these opportunities will accelerate the evolution of Halfords from a traditional retailer to a contemporary provider of products and services, and will contribute future growth.”

Company Spotlight

Halfords is a retailer of and leisure products in the United Kingdom and Ireland and an independent operator in garage service and auto repair in the UK. [4]


Halfords Q4 FY12 Pre-Close Trading Statement

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