HALFORDS is back on track after the so-called “Wiggins effect“ helped lead a return to sales growth for the struggling retailer.
Hours after unveiling a new chief executive in former Pets At Home boss Matt Davies, the company revealed a 4.6% increase in retail sales in the 13-week period to September 28, compared with a 7.5% drop in the first quarter.
The rebound was driven by a 14.7% surge in cycling sales, which the business put down to better weather and the British success in the Tour de France and Olympics from the likes of Bradley Wiggins, Sir Chris Hoy and Lizzie Armitstead.
Halfords said it expected pre-tax profits for the first half of the year to be £40m to £42m, nearly 20% higher than City forecasts.
Full-year profits, meanwhile, are expected to be at the top end of previous guidance of £66m to £70m.
Within cycling, the chain saw strong sales of its Boardman and Pendleton ranges, named after British Olympic gold medallists Chris and Victoria respectively.
The better-than-expected performance will be a positive welcome for Davies, who takes up his new post today following a tough period for the Redditch-based group.
He replaces David Wild who quit in July following a profit warning and a sharp sales decline, as record rainfall hit sales of cycles and outdoor goods.
The chain, which has 467 stores in the UK and Ireland, reported a 2.7% rise in car maintenance revenues, although car enhancement sales, which includes stereos, mats and alloys, fell 1.5%, as fewer satnavs were sold.
Halfords Autocentres, which provide MOT and car servicing, saw a 12.4% rise in sales in the second quarter, compared with a 9.2% increase in the first three months.
This was the strongest like-for-like performance since the chain was acquired in February 2010, the group said, and was driven by better-than-expected take-up of its tyre services.
Chairman Dennis Millard said the group had recovered some ground lost in the spring.
But he added: “Our second-half planning assumptions, however, remain cautious given the prevailing pressures on the consumer as we approach the important winter and Christmas trading periods.”
Davies, who was chief executive of Pets At Home for eight years, will be paid a £500,000 salary and is entitled to a potential £750,000 annual bonus, with up to a further £750,000 in long-term incentive shares from next August. He said he wants to help the group achieve its “full potential“.
Commenting on Davies appointment, Bethany Hocking, analyst at brokers Investec, said: “He is a very strong hire and his background should enable him to successfully implement Halford’s service-led strategy.”