British retailer Halfords suffers cycling sales wobble

(Adds shares, quotes, details)

By Neil Maidment

LONDON, Sept 2 (Reuters) - British car parts to bikes retailer Halfords said a recent boom in bicycle sales had fallen off sharply in its second quarter, though strong trading across the rest of its retail business would keep it on track to meet profit forecasts.

Boosted by British cycling successes at events such as the Olympics and Tour de France, cycling has increased in popularity, with Halfords expanding its accessories, bike ranges and improving online categories to tap demand.

However, the company said on Wednesday wet August weather and increased discounting in the market had led to an 11 percent decline in like-for-like cycling sales in the first eight weeks of its second quarter, well below its expectations.

Sales rose 2 percent in its first quarter and grew by 11.4 percent in its previous fiscal year to March 27.

Despite Halfords' profit reassurance, shares in the firm, which trades from 470 stores in the UK and Ireland (Other OTC: IRLD - news) and another 306 Autocentres, fell almost 10 percent on the news.

By 0724 GMT they were down 7.6 percent at 471.5 pence.

"Confidence in the long-term potential is likely to weaken a bit today, but with the weak patch already behind us our view of the long term prospects don't alter," N+1 Singer analyst Matthew McEachran said, maintaining a "buy" rating on the stock.

In recent years the firm has invested heavily in customer service, store upgrades and new ranges, helping it to achieve its 1 billion pound ($1.53 billion) sales target a year early in June.

Chief Executive Jill McDonald, who joined Halfords in May from fast food chain McDonald's, said she was confident the cycling business would grow, helped by a planned revamp of children's bikes and accessories.

"This recent weakness in our cycling sales is disappointing, but it comes after two years of very strong growth in the category," McDonald said.

Halfords said retail trading elsewhere, particularly in car maintenance, had been strong and that improved profitability and cost control meant full-year group pretax profit would be broadly in line with market expectations.

Halfords is expected to post a pretax profit of 86.2 million pounds, up from 84.1 million pounds a year earlier, according to Reuters data. ($1 = 0.6532 pounds) (Editing by David Holmes and Louise Heavens)