Halfords loses out as mild winter hits car maintenance
12 January 2012 10:31
Bicycle and car parts retailer Halfords has said that the recent mild weather has made customers more wary than ever of spending money on car maintenance and repairs. Halfords added that increased bike sales were not enough to offset these cutbacks.The retailer, which has 467 outlets, said like-for-like sales of car maintenance products fell 12.8% in the 13 weeks to December 30th, compared to a 7% drop in the 39 weeks to the same date, as the milder weather meant drivers bought less de-icer and windscreen scrapers.
Car enhancement products were down by the same amount as motorists cut back on luxuries such as sat-navs.
But chief executive David Wild said he was encouraged by a 15.1% increase in cycling revenues, led by a recovery in children's bikes sales over Christmas.
Its 247-strong autocentres business saw rising demand for tyres and its stores experienced record demand for the fitting of lightbulbs, batteries and windscreen wiper blades onto cars.
Total like-for-like sales fell 4.8% in the 13 weeks but the group said that if the effect of the mild weather was stripped out, sales of car maintenance products improved on the first half of its financial year.
Shares fell 2.5% today after the group said its gross margin in the year to March 30 was set to decline by up to 1.5 percentage points as it put on more discounts and struggled to pass on rises in its costs.
This was more than the fall of at least one percentage point it had previously estimated but it said the fall was roughly in-line with market expectations.
Freddie George, an analyst at Seymour Pierce, downgraded his full-year profits forecast to £93 million from £99.6 million and said his estimate for the next year would also be pushed downwards.
He said the company had "limited growth prospects" and had "enjoyed supernormal profits over the past two years".
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