Tuesday 4 September 2018 8:45 am

Halfords sales speed up as servicing business benefits from drop in car sales

Halfords Group reported sales growth this morning against a tough backdrop, but profits are still expected to remain flat on last year.

The update came ahead of new chief executive Graham Stapleton's strategy update at the end of this month, though analysts do not expect  any radical changes at the business.

The figures

Total revenue in the 20 weeks to 17 August was up 2.7 per cent, with growth at both in both the retail operation and Autocentre services.

Like-for-like revenue climbed 2.8 per cent, with especially strong growth in car maintenance retail and the Autocentres.

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Why it's interesting

It has been well-recorded that sales and production of new cars in the UK have declined, but this is good news for Halfords. The repair and servicing part of its business benefits from more old cars driving on the road.

Hargreaves Lansdown senior analyst Laith Khalaf said that there is "no need to reinvent the wheel" when Stapleton updates investors on his new strategy.

"In a retail market increasingly disrupted by online competitors, investing in personal services looks like the right approach," he said. "Upskilling the workforce will cost money in the short term, but should allow Halfords to carve itself a sustainable niche in the digital world."

Analysts at Liberum agreed, saying: "We do not expect anything radical but further progress in developing IT, systems, with a strong customer service overlay, is likely to feature strongly."

 Read more: Car production tumbled last month

What Halfords said

Graham Stapleton said: "I am pleased with the trading performance for the first 20 weeks of the year in what continues to be a challenging retail environment. In retail, sales growth was supported by fitting services, new ranges of workshop and car cleaning products, and electric bikes. In Autocentres, we continued to build momentum on our transformation plan. I look forward to presenting our strategy update at our capital markets event on 27 September."

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