Car repairs and cycling commuters lift Halfords a gear

By Mark Potter

LONDON (Reuters) - Demand for car maintenance products and commuters switching to bikes to avoid soaring petrol prices are helping Halfords (HFD.L) to beat a consumer downturn, the retailer said on Wednesday.

Halfords, which sells one in three bikes in Britain, said first-quarter profit beat its expectations, helped by demand for high-margin car maintenance products such as wiper blades, batteries and bulbs.

"There is no doubt that the consumer is facing more pressures," Finance Director Nick Wharton told reporters. "But our business provides some good protection. A healthy element of our business is needs-driven and we are a low average-transaction retailer."

Wharton also said that Halfords' more discretionary markets -- leisure goods and car improvements -- were also benefiting from favourable trends, with the quest for healthier and more environmentally-friendly living boosting bike sales and new technologies like satellite navigation driving car improvements.

Halfords, which runs about 450 stores, said sales at shops open more than a year rose 0.2 percent in the 13 weeks to June 27, adjusted for the timing of Easter. This compared with an 8.4 percent increase in the same period the year before.

"This is a reassuring statement," Morgan Stanley analysts said in a research note. "Most other hardline retailers would love to have this level of like-for-like sales at the moment."

At 9 a.m., Halfords shares were up 2.2 percent at 282.5 million pounds, valuing the firm at about 591 million pounds.

The stock has outperformed the UK general retail index .FTASX5370 by 36 percent this year, helped by its relative resilience to a consumer downturn as shoppers cut back spending amid rising food, fuel and mortgage costs.