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Autocentres improve but parts and accessories dip for Halfords

Retailer Halfords said the cost of fuel has forced cash-strapped motorists to reduce mileage and cut expenditure on their cars.

 It came after the group reported like-for-like sales at its 466 Halfords stores fell 1.1% in the second quarter of 2011.

Good demand for bikes was offset by a 2.8% and 10.6% drop in sales of its car parts and car enhancement categories respectively.

Like-for-like sales at the Halfords Autocentres chain of 242 service centres were up 2.1% percent, having been up 1.2% percent in quarter one.

Overall, the Autocentres’ revenue has increased 7.3% from a year ago, and Halfords plans to invest further in promoting the division, bought from Nationwide Autocentres, and grow it to 400 sites.

"When you are seeing the scale of fuel price increases that we are, it is inevitable that customers will look for ways to save money," chief executive David Wild said, noting a 15% percent year-on-year increase in the price of petrol. Wild said motorists' average mileage was down 1-2 percent.

"Customers are pushing back spend on car servicing. If they do not defer a service then they will go for an interim service rather than a full service. They wait until the light comes on before they check their oil," said Wild.

The group warned it was having to increase promotional activity to stimulate trade.

It is forecasting a retail gross margin decline of at least 1 percentage point by for the year to end March 2012.

"Today's retail environment is a tough one. We don't believe it's going to get any easier any time soon. This is a new reality," said Wild.

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