Wiggins joins halfords as profits drop a gear – yahoo news uk
Slowing cycle sales threw a spanner in the works for new Halfords boss Jill McDonald as she unveiled a drop in half-year profits.
Poor weather and comparisons with a strong period last year saw same-store cycling revenues fall 2.9% in the six months to 2 October.
The group, which also sells car parts and runs autocentres, posted a 6% fall in pre-tax profits to £46.4m and said earnings in the next financial year were unlikely to grow. Shares fell 9%.
group revenues rose to £533.5m, with like-for-like sales up 1.7%.
But the weak performance of cycling, which was dragged down by a 7.6% decline in the second quarter, illustrated the challenge facing Ms McDonald in trying to maintain growth that has been boosted in recent years by Britain’s Olympics and Tour de France successes.
The chief executive swapped burgers and fries for handlebars and engine oil when she joined from fast food restaurant McDonald’s, where she had been UK boss, earlier this year.
Her new turnaround plan includes signing up Olympian and Tour de France champion Sir Bradley Wiggins to launch a new childrens’ range.
Halfords’ cycling slump was blamed on a four-week period from mid-July to mid-August, reflecting poor weather as well as comparison with a period last year boosted by a Tour de France section being held in Yorkshire.
Ms McDonald described the cycling performance during the period as “disappointing” as she unveiled a new “Moving Up A Gear” strategy which included better use of customer data, more innovation, a better shopping experience and enhanced customer service.
She said: “Halfords is now a fundamentally strong business, operating in markets with good growth prospects. However the modernisation process is not yet complete.
“Under the new strategy we will continue to invest to move from fixing the basics to enabling sustainable growth.”
The new boss said cycling sales had been “extraordinarily strong” over the past two years amid economic improvement, British sporting success, investment in cycling infrastructure and warm sunny summers.
But she said there was still “large scope” for more growth of 3-5% per year, though Halfords needed to continue to keep an eye on rivals and be “more in tune” with what customers wanted.
Halfords added that the introduction of the National Living Wage, starting at £7.20 an hour for workers aged 25 and over, would add £2m to annual costs, rising to £6m in five years.