Car parts, bikes and camping equipment purveyor Halfords (HFD) moves higher on a reassuring Christmas trading update.

Despite warm weather crimping car maintenance sales, a return to like-for-like cycling growth leaves Halfords on track to achieve full-year pre-tax profit guidance of between £78-£82 million, albeit with the help of cost savings.

Ahead of the third quarter update, there had been fears a combination of unprecedented weather conditions and cycling sales weakness would trigger a new wave of earnings downgrades. Today, cash-generative Halfords allays such concerns.

Car maintenance sales, which respond positively to frost and colder weather, were indeed hit by the UK's particularly mild Autumn and Winter.

Nevertheless, a 0.1% like-for-like sales decline is better-than-feared; a strong performance in wiper blades, boosted by wet weather, and bulbs, as well as growth in fitting services, helped mitigate the weather impact.


But the big news is cycling sales, which sagged in the summer due to wet weather, rebounded in the 15 weeks to 15 January, with mild winter conditions coaxing more people off of their sofas and out onto two wheels.

Web chart - HFD - Jan 2016

Trading from 463 Halfords stores in the UK and Republic of Ireland and from nine Cycling Republic outlets, Halfords' like-for-like cycling sales grew 1.1%, with a strong performance in premium bikes offsetting subdued parts, clothing and accessories sales.

Over in the Halfords Autocentres business, like-for-like sales grew for the ninth consecutive quarter on the spin, with service, maintenance and repair revenue progression offsetting lower tyre prices.

Driving ahead with her 'Moving up a Gear' strategy, CEO Jill McDonald (pictured below) also highlights a record day online over the Black Friday weekend, with Halfords in fact racking up its biggest-ever day for total sales on the 23 December.


Halfords' shares have been in reverse for the past six months following a poor second quarter cycling season which stoked some debate over whether cycling is now ex-growth. Such fears look overdone in the context of the Q3 update, which drives shares 9.3% higher to 355.2p.

Issue Date: 21 Jan 2016