Halfords is facing further disruption due to problems at its new distribution centre, which will likely have an effect on second quarter sales, according to one analyst.
The retailer suspended its 24-hour delivery service and admitted to having “system issues”, according to the Daily Mail, which yesterday revealed similar problems at its new facility, which opened in July.
The next day delivery service had been stopped as concern grew about stock levels in stores, according to the newspaper.
Staff said the situation was “manic”.
A Halfords spokesman conceded there had been some teething problems but said the retailer is “confident the majority of these are behind us”.
Numis analyst Andy Wade said it is “clear” the troubles will have “some impact” on Q2 like-for-likes.
He said: “Non-optimised supply chain will impact Q2 LFLs: There will always be issues when implementing a new DC and, having spoken to management, Halfords’ view is that the move has been ‘very well executed’.
“However, management acknowledges that there has been 4-5 weeks where the business has been ‘struggling to get product through the DC’ and there have been ‘bad days’. We understand that the business is now ‘past the worst’ but there is still ‘some catching up to do’ to fill shelves.
“However, the rationale for the DC move remains clear and, encouragingly we do not expect to see downgrades.”
Halfords estimates the new centre will make savings of £4m a year by 2011.