Halfords is to axe its specialist bicycle-only stores, Bikehut and Cycle Republic.

The UK’s leading automotive and leisure products retailer Halfords has announced further cost reduction plans following a slight fall in sales.

In the company’s pre-close statement, Halfords said that it is expecting to make a pre-tax profit of £92-92.5 million for the year ending 3 April, which is higher than analysts had predicted.

Despite witnessing an increase in sales in the cycling and car maintenance departments, group sales overall for the year have decreased by 1.2% with like-for-like sales falling by 3.3%.

In the 13 weeks to 27 March, group sales decreased by 1.7% and like-for-like sales compared to the year before down by 3.8%.

The car enhancement category experienced a drop in revenue, as the credit crunch deters consumers from purchasing high end products such as satellite navigation systems.

As part of the ongoing cost reduction scheme, the retailer will be scrapping its specialist shops, Bikehut and Cycle Republic, after two years in operation. The stores will either be rebranded as Halfords or closed down, costing the firm an estimated £1.2m in the process.

Halfords blames the poor performance of its pilot specialist stores on the success of its superstores and the pervasion of online shopping amongst UK consumers. The retailer stated that it “no longer believes that the stand-alone concept will deliver the absolute levels of financial return demanded of Halfords’ investments.”

Halfords has already completed a number of staff cuts across the company which have saved the firm approximately £2.8m over the year.

David Wild, Chief Executive Officer of Halfords, is upbeat about the company’s performance: “The healthy like-for-like growth from our core product areas of Cycling and Car Maintenance re-enforced by our management efforts to improve margins and control costs has delivered earnings growth. In the present economic turbulence, this emphasises the resilient quality of our business.

“While we believe it is prudent to forecast that the consumer environment will remain challenging, Halfords’ unique, market-leading position, combined with our active management of the business, provide the Board with confidence in the Groups’ prospects for the current financial year.” 

Halfords sold more than one million bicycles in the past year, as commuters are turning to cycling in a bid to beat the recession.