Bike sales keep Halfords on track
SALES of premium cycle brands and entry-level models are buoying revenues at Redditch-based Halfords, but margins are expected to reduce in the year, according to the group’s interim management statement.
But chief executive David Wild said the group was confident in its cash generation abilities, and predicted that an expected 14p dividend payment plus its £32.4m share buyback programme would return more than £120m to shareholders.
The group said that despite ‘difficult’ conditions for UK consumers, it had seen strong growth in cycle sales particularly in premium brands Boardman, Voodoo and Carrera, while the new entry-level Trax brand was performing well.
Total group revenue performance was up by 0.3%, with its autocentres division rising 7.4%.
The group said it was concentrating on margin enhancement, but predicted a gross margin reduction of at least 100bps for the full year because of increasing sales of lower margin cycle brands.
Mr Wild said: “Halfords is continuing to trade effectively in a difficult environment for UK consumers. Our response to the economic challenges is a clear trading strategy that offers value through great prices, quality, innovative products and expert service.
“The results can be seen most clearly in our strong cycling sales, where customers have responded favourably to our promotions and new products. Our position is supported by “that’s helpful that’s halfords”, a marketing campaign that reinforces Halfords unique service proposition.
“We are also pleased with the progress in our Autocentres business. The positive trend in sales has been achieved at a difficult time for motorists when they are reducing mileage. It demonstrates the strength of our proposition and the potential for the Halfords brand to grow in the garage-servicing sector.
“We remain confident in the cash generation capabilities of the business and with the combination of recommended dividend payments for FY11 together with the share buyback, we will return a total of £120m to shareholders.”
