Halfords sees more Britons turn to cycling to save cash

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Bicycles to car parts retailer Halfords said people were scrimping on the maintenance of their vehicles to save cash in straitened times and it had no visibility on when conditions in its markets will improve.

Profits fell 20 per cent to £54.7m in the six months to September 30 after sales of maintenance and enhancement products were hit by the impact of soaring petrol prices.

Chief executive David Wild said yesterday: “It is impossible to predict when trading conditions will ease.

“The uncertainty remains the oil price. That has a big impact on inflation and without visibility on that it’s very difficult to be optimistic.”

Mr Wild said Britons were driving less and deferring maintenance when they could avoid it.

“The rate of MoT failure has now gone up to 41 per cent, five years ago it was 28 per cent. Around 40 per cent of the tyres that we see are illegal because customers are waiting until the last minute before they change them,” he said.

“More and more people are reluctant to check the oil, they wait until the light comes on before they top it up.”

Cash-strapped British consumers are feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, and as they worry about a stagnant housing market, job security and a fragile economic recovery.

Industry group the British Retail Consortium (BRC) said on Tuesday a 0.6 per cent year-on-year fall in October sales from stores open more than a year augured badly for the key Christmas trading period.

Mr Wild said there was evidence Britons were turning to cycling in the face of austerity, as first-half bike sales rose 10 per cent.

He said: “Cycling is very much in tune with many contemporary trends.

“It’s the cheapest way to get around apart from walking, it’s healthy and you’re doing your bit for the environment.”

Mark Photiades, an analyst at Singer Capital Markets, said: “We continue to believe that Halfords remains a fundamentally sound business with domestic growth opportunities.”

The firm, which trades from 466 Halfords stores and 246 Autocentres in the UK and Ireland, said revenue fell 0.5 per cent to £454m, with sales at Halfords stores open over a year down 1.9 per cent.

Retail gross margin fell 128 basis points.

Halfords, which ended the half with net debt of £140m, maintained its interim dividend at 8.0 pence a share and full-year guidance for a gross margin decline of at least 100 basis points and a four per cent rise in operating costs.