Halfords credits "staycation summer" for revenue rise to help cushion sterling blow

 
Jasper Jolly
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Premium cycling was one of the top-performing sales growth categories for Halfords (Source: Getty)

Car accessories and bike retailer Halfords today reported surging sales in camping gear and electric bikes drove increased increased revenues during a British "staycation summer", cushioning the blow of weaker sterling.

Halfords' share price had risen by more than 4.5 per cent at the time of writing, reaching its highest point since the start of August after five months of steady decline.

The figures

Total group revenue rose by 4.8 per cent year-on-year in the 20 weeks up to 18 August, with a 6.2 per cent increase in retail revenue driving growth. Total revenues in the group's Autocentres arm fell 1.4 per cent.

Like-for-like sales rose 2.7 per cent across the group, with retail sales up 3.5 per cent.

Motoring travel solutions – camping equipment such as roof boxes, cycle racks and other related accessories for holidaymakers – were the stand-out performers within the retail arm, with like-for-like sales growth of 8.2 per cent year-on-year.

Meanwhile like-for-like sales of cycling products rose 5.2 per cent. The company reported sales of more expensive bikes and accessories were the main causes of the strong growth, with electric bikes and cycle repairs as highlights.

Halfords also said it had extended a revolving credit facility from 2019 to 2021, and amended the terms from £170m to £200m.

Why it's interesting

Sterling remains more than 14 per cent less valuable against other major currencies since the EU referendum last year, according to the Bank of England. That has made the going rougher for retailers importing large proportions of their goods from abroad, while the rise in inflation is squeezing Britons' spending power.

However, with those factors in play Halfords suggests there is space for growth in spending in more domestic-focused tourism, driving camping and cycling within the UK, where the effects of the devaluation on spending power are less pronounced for British holidaymakers.

The sterling depreciation brings a £25m "cost headwind" across the full 2017/18 trading year, but Halfords said it expects to "fully recover the FX impact over time". Around £15m of that will relate to the first half of the year, Halfords said, most of which is covered by this latest update.

What Halfords said

Jill McDonald, the Halfords chief executive who will depart for M&S in October, said:

I am pleased with the trading performance over the first 20 weeks of the year in both motoring and cycling.

A combination of good planning and execution meant that we optimised sales from the staycation summer, with strong growth in camping, roof boxes and cycle carriers.

Our foreign exchange mitigation plans are working in line with expectations and we are well prepared for the peak trading period through winter."

In short

More expensive foreign holidays may be bad news for Britons, but if they become more appreciative of the merits of their own nation, Halfords' results suggest it could be in line to pick up momentum, despite the undoubted currency headwinds.

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