Halfords on right path in first quarter on sales of premium bike and dash-cams
Car parts and bike peddler Halfords pedalled on the right path towards its full year targets during the first quarter, with a solid first quarter against tough comparatives thanks to premium bikes, children's car seats and dashboard-cameras.
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Halfords Group
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Group sales in the 13 weeks to 3 July were up 3.6% on the equivalent period last year, with retail up 3.4% in spite of less helpful weather and tough comparatives especially in cycling, and autocentres up 5%.
Like-for-like revenue was up 3.5% for the group as a whole, or adjusting for the timing of Easter, underlying LfL growth was said to be up 4.2%.
The numbers were marginally behind consensus forecasts, leading to shares falling sharply in early trading but recovering somewhat over Wednesday's session.
Retail LfL sales grew 3.5%, with travel solutions providing the strongest LfL growth of 9.2%, especially in camping and child safety seats, followed by car maintenance growth driven by parts and workshop sales up 7% and 10% respectively.
In-car enhancement, connectivity equipment and dash cams grew 31%, but growth was offset by subdued car cleaning sales.
New chief executive Jill McDonald, poached from McDonald's in March, said: "Our retail business continues to deliver a broad-based top-line performance, against two previous years of strong like-for-like growth.
"Cycling continues to grow; the highlights in the quarter being premium bikes and cycle repair, with sales up 8% and 24% respectively."
Guidance for the full-year was maintained, with McDonald saying the 'Getting Into Gear' plan "continues to progress with pace, and we're on track with the retail trading initiatives and autocentres priorities we outlined in June".
Broker N+1 Singer said the company's recovery has become more broadly based and hailed the good momentum in areas such as cycle servicing.
"Whilst we didn’t expect much in the way of fireworks today Halfords is one of few sector stocks not looking overly rich on valuation."
Investec's Kate Calvert said, while the numbers were a shade below consensus, it was a "consistent... balanced performance" across retail categories, that was "reassuring as it shows widespread growth in our view".
She added that ongoing business investments into staffing, service and training under Getting into Gear should help push the top-line performance as comparatives ease through the full year.
"We continue to see upside from a range of self-help initiatives, and ongoing balance sheet deleverage gives new CEO Jill McDonald plenty of options as the modernisation of Halfords continues."