Halfords encounters heavy traffic

As expected, bikes and car accessories retailer Halfords has produced weak interims.

It also said it will deliver full-year pre-tax profits slightly below FactSet's consensus estimate of £70.21m.

Presenting results for the half year ending September 28th, Chairman Dennis Millard said: "Our second-half Retail planning assumptions remain unchanged and cautious given the prevailing pressures on the consumer as we approach the important winter and Christmas trading periods. We continue to plan for a full-year group profit before tax and non-recurring items of between £66m and £70m."

His caution seems sensible as interim pre-tax profits were down 22.5% at £42.4m (2012 first half: £54.7m) on revenues that were almost flat at £455.6m (2012 first half: £454m).

The company's performance was dragged down by its Retail division, which saw sales drop by 1.9% to £393m (2012: £400.6m) and operating profits before non-recurring items plunge by 23.6% to £42m (2012: £55m).

Its much smaller Autocentres operation performed far more strongly, increasing sales by 17.2% to £62.6m (2012: £53.4m), increasing operating profits before non-recurring items by 10% to £3.3m (2012: £3m).

Halfords gross margin also fell by 23 basis points, while inflationary pressures and investments saw operating costs rise by 6.4% to £201.8m (2012: £189.6m).

More positively, it produced free cashflow of £59.5m, £19m more than in the first half of last year. This enabled net debt to be reduced by £31.3m since the end of the 2012 financial year to £107.9m.

The interim dividend of eight pence a share was maintained and will be paid on January 25th.

CM