Analysts have cut their forecasts on the back of Halfords’ worse-than-expected Christmas trading update.
A 16% fall in bike sales raised questions over the long-term outlook for Halfords’ success in the key category.
Seymour Pierce analyst Kate Calvert said she was “concerned over whether the bike market has peaked” and trimmed her full-year forecast by 3% to £127m.
Halfords chief executive David Wild admitted bikes were a “disappointment” but insisted: “We don’t believe it’s a long-term problem.” He said children’s bike sales suffered because of the extent of competition in the children’s gifts sector.
But he believed bikes were a “good news market”. He said a slowdown in cycle-to-work schemes because of recent rule changes introduced by HM Revenue and Customs was temporary.
Finncap analyst David Stoddart suspects Halfords lost share in the bikes market in the period but said: “Nevertheless, it holds leading positions in growing markets.”
Retail like-for-like sales slumped 6.6% in the 13 weeks to December 31 and full-year profits will be at the low-end of expectations.
Total group sales rose 3.5% as Halfords’ acquisition of the Autocentre business in February last year drove performance - like-for-likes at the business rose 1.6%.
Wild said he was delighted by the performance of car maintenance products and services. However, he was cautious about prospects and said: “Discretionary spend is under pressure. It’s a tough market.”