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Halfords sales fall as drivers cut expenditure

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's quarterly update revealed that 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%, having been up 1.2% 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. Wild said motorists' average mileage was down 1-2%.

"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 one. 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 one percentage point by for the current year.

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

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