Halfords defy economic downturn
July 25, 2008
Halfords have defied the trend of retail downturn. They have announced better than expected profits for the first quarter. The profits have been driven by a focus on costs and strong sales of car maintenance products.
The retailer posted like for like sales growth of 0.2% for the 13 weeks to 27 June.
Growing numbers of the people are turning to cycling as a healthier and cheaper means of transport. This has pushed up sales of bicycles. Halfords sales account for one in three bikes sold in the UK. Also many people are choosing to do minor repairs on their cars themselves. Halfords has said its car maintenance division has been boosted by demand for products such as batteries, oil and windscreen wipers and has “continued to perform strongly, reflecting its inherent counter seasonal and defensive characteristics.” They have also said its first half profits were ahead of its expectations.
Halfords finance and joint managing director Nick Wharton said the performance “underlines Halfords resilient and defensive characteristics”. He added “While [we are] not immune to the ongoing challenging retail environment, our market-leading positions, extensive ranges and unique service proposition continue to provide us with confidence in delivering full-year earnings in line with our expectations. There is no doubt the consumer is facing more pressures. But our business provides some good protection.”
Analyst at Credit Suisse Assad Malic said “Halfords in our view exhibits a more defensive product set than its peers with a mix of product categories playing to both discretionary and more needs-driven consumer spending categories.”
See www.halfords.com for more information.
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