managers and head office staff will take a £2m cut in bonuses after a warm winter and poor summer hit sales last year.
said it would meet profit targets this year despite disappointing sales, as it had saved about £4m by trimming working hours for store staff, cut bonuses for about 1,000 head office staff, including the board, and recorded a fall in distribution costs.
Revealing a 0.4% rise in sales for the 15 weeks to 15 January, Jill McDonald, chief executive of Halfords, said: “We are pleased with the group’s performance given the unprecedented weather conditions.”
Sales at the chain’s established stores rose 0.3% as underlying sales of bikes and cycling gear returned to growth in the winter quarter after a difficult summer season. However, underlying sales of car kit, such as de-icer, ice scrapers and batteries, slid as the UK enjoyed one of the warmest Decembers on record.
“All businesses are affected by the weather and we are not unique in that,” said McDonald.
She said the 1.1% rise in underlying cycle sales over the quarter backed up the company’s conclusions from market research that an was a “blip”.
“We believe the cycle market will continue to grow, but more modestly than we have had in the last couple of years,” she said.
The company introduced new children’s bikes before Christmas and McDonald said the company was on track to launch .
David Jeary, an analyst at Canaccord Genuity, said the rise in cycling sales was welcome but added: “We believe investors will need to see more than one positive quarter to feel confident that summer 2015’s weakness was a weather-driven blip rather than the start of a trend.”
Shares in Halfords have fallen by more than a third since August as the company warned that cycling sales had taken a dive, setting off fears that a bike craze in the UK, fuelled by the sporting success of cyclists such as in the Tour de France and at the 2012 Olympics, had come to an end.
Like many other retailers, Halfords also faces increasing costs.
The company said it expected the national living wage, a new minimum hourly rate for over-25s planned for April, would add £2m to costs. However, it said that cost could be mitigated by savings and productivity improvements, such as retraining staff to build bikes.