Tough times at Halfords though bike sales recover

7th Apr 2011 07:04

Bicycle and car part retailer Halfords predicted a continuing tough trading environment as it posted a sharp fall in like-for-like sales in the 13 weeks to 1 April and lowered its profits forecast.Like-for-like sales from the company's retail outlets were down by 6.8% from the same period the previous year, resulting in a 5.5% fall over the full year. However, there was one bright spot for the company with a return to growth in bicycle sales, which were up by 8.7% over the quarter.Margins have been broadly flat within the retail division, in line with previous guidance. In the car service division, quarterly like-for-like sales were down by 1.4%. Operating profit from the division is expected to come in at just £7m for the year after a relaunch of the service was delayed and amid a tough consumer environment.Halfords predicts overall full-year pre-tax profits of between £124m to £127m on sales of about £869m. In January it had predicted that profits would be at the lower end of the £127m to £135m range.Turning to the current year, Halfords said the consumer environment remains difficult. In the retail division, where cost pressures are increasing, gross margins are expected to reduce by about 30 basis points. In the car service division, initial profit objectives have had to be put on hold as drivers delay big spending on their cars."We believe the environment will remain difficult for customers," said chief executive David Wild. "We are responding with a trading strategy that offers great value, expert services and many new products; including the re-launch of our entire Premium Cycle range."Wild also sweetened the pill for shareholders with the announcement of a share buyback programme."The strength of our cash generation and our balance sheet means that we can both return capital to our shareholders, maintain our dividend policy and retain the flexibility to invest when we identify the right opportunity," he said.