Halfords' shares dropped by 2.4 percent after the British retailer posted underlying pre-tax earnings for its first half-year that were off by 9.8 per cent from the year-ago period to £36.8 million (€41.1m-$48.4m), weighed down by currency headwinds. The company estimates that it incurred an extra cost of sales of £15 million (€16.8m-$19.8m) in the first half due to the weaker pound.
However, group sales for the 26 weeks to Sept. 29 were up by 3.8 percent to £588.7 million (€657.5m-$774.5m), or by 1.5 percent on a same-store basis. Higher sales of electric bicycles, acquisitions and the development of private label and e-commerce helped the British retailer to book high sales from bike-related items, offsetting a drop in the smaller automotive sector.
The company said it did not repeat the strong expansion of last year, which was driven by strong volume growth in 2016, but a decline in volume during the first half of this fiscal year was largely offset by an increase in average selling prices.
Retail sales went up by 4.5 percent to £511 million (€570.7m-$672.3m), or by 1.9 percent on a same-store basis. The gross margin declined by 1.8 percentage points, hurt by the pound sterling's weakness.
Cycling revenues increased by 7 percent to £245.5 million (€274.2m-$323.0m), or by 2 percent on a comparable store basis, with sales growth in both bikes and parts, accessories and clothing, thanks to the first-time results inclusion of Tredz and Wheelies - acquired in May 2016 - and newly opened Cycle Republic stores. In particular, Halfords' online presence through Cycle Republic and Tredz contributed to the positive results.
The group reported significantly strong e-bike sales, reflecting the popularity of new private label ranges launched at the beginning of the year. Halford has opened three new Cycle Republic stores this year and now has 18 fully operational locations. The management said it is encouraged by the continued double-digit growth in same-store sales and the success of its transactional website since its launch in August 2016. This web store contributed approximately 15 percent of total Cycle Republic sales in the first half.
Revenues from Halfords' garage servicing and auto-repair unit declined by 0.6 percent to £77.7 million (€86.7m-$102.2m), or by 1.3 percent on a same-store basis. However, the gross margin increased by 2.7 percentage points to 67.7 percent.
Meanwhile, figures published by the British Bicycle Association (BAGB) indicate a dramatic drop in bicycle imports in the U.K., which are likely to be down by 25 percent or more in volume for all of 2017. Experts attribute this to a possible oversupply in the market and not just to higher prices due to the weak pound or the stronger electric component.