Halfords PLC (LON:HFDS) saw its shares gain this morning as the bicycles-and-car-parts retailer maintained its full year profit guidance as it reported solid growth in like-for-like retail sales boosted by a “staycation summer”, with more Britons opting to holiday at home due to the weaker pound.
In a trading update for the 20 weeks to August 18, the FTSE 250-listed firm said its retail like-for-like revenue rose by 3.5%, with overall group revenue up 2.7%.
READ: Halfords up as 7.5% drop in annual profits proves touch better than expected
Halfords said its cycling like-for-like sales increased by 5.2% reflecting good growth in sales of premium bikes, with electric bikes and cycle repair services also highlights.
Meanwhile, the firm’s retail motoring like-for-like sales rose by 2.3% driven by growth in fitting services for dash cams, camping, roof boxes and cycle carriers which it said was “supported by the demand for staycations.”
In a financial outlook statement, the group said it continue to anticipate full year 2018 group pre-tax profit to be in line with current market expectations, and all financial guidance for the full year remains unchanged.
Halfords added that, as previously guided, the depreciation of sterling will have around a £25mln gross cost headwind in full year 2018, and with around £15mln in the first half of the financial year.
A combination of good planning and execution
Jill McDonald, Halford’s chief executive – who announced in October that she would be leaving to head up the Clothing, Home & Beauty division of Marks & Spencer Group PLC (LON:MKS) - commented: “A combination of good planning and execution meant that we optimised sales from the staycation summer, with strong growth in camping, roof boxes and cycle carriers.
“This complemented our service-related retail sales, which grew significantly faster than our total sales, as we continue to demonstrate our relevance to the growing 'do-it-for-me' customer.”
She added: “Our foreign exchange mitigation plans are working in line with expectations and we are well prepared for the peak trading period through winter."
Shares up, but some analyst caution
In early trading, Halfords’ shares were 4.3%, or 13.4p higher at 328.8p.
However, independent retail analyst Nick Bubb noted that “although there is no mention of ‘the weather’ or the phasing through the period, the last few weeks haven’t been ideal for camping or cycling and may well have taken the edge off trade, because the overall Retail LFL sales growth of 3.5% is a bit below expectations (despite the benefit of the later Easter, weak Q1 comps and the fine weather in June/July).”
-- Adds share price, analyst comment --