Retailer Halfords has reported strong sales of bikes and said hard-up motorists were upgrading their existing vehicles rather than buying new cars.

Redditch-based Halfords s aid like-for-like sales increased by 6.1 per cent over the 52 weeks to March 31 despite a tough retail climate.

But its shares came under pressure as the group said the need to devote more space to in-car technology such as satellite navigation systems had come at the expense of margins.

Halfords - which employs around 440 people in Redditch - guided the City towards annual profits of £77 million, which would represent progress on the £75 million that it made last year under new accounting rules. Under the old regime, it reported profits of £77.5 million.

Chief executive Ian McLeod said weakening consumer confidence and a sluggish UK economy posed challenges, but Halfords was able to defend sales more easily than other retailers.

There was evidence that motorists were spending more on repairs and fitting new technology into their current cars rather than buying new ones which have it already installed, he said.

This was visible in strong sales of CD audio players and Mr McLeod noted that more than half of cars are still without this kind of entertainment system. Halfords also stocks a new device that allows drivers to play their iPod via their car stereo.

He said: "We are not immune to the economic factors, but we are more resilient and when you compare our results to other retailers it does demonstrate that fact."

Total sales were 8.4 per cent ahead and the company continued to see the potential for a further 150 stores in the UK, with 25 due to open over the coming 12 months.

Among its leisure products, Halfords said customers had r eacted well to a new upgraded range of Apollo bikes and the launch in October of more specialist bikes under the Carrera brand.

This had enabled its Bike-hut brand to steal a march on its competitors and grab market share, the company said.

Halfords sells every third bicycle in the UK and Mr McLeod said stores in London were vibrant, with sales of commuter bikes on the rise and three times as many folding bikes shifted as last year.

The bikes and car parts retailer's expected pretax profit of around £77 million is just below the median analyst forecast of £80 million.

A spokesman for Numis Securities said: "We had fore-cast a 170bps (basis points) decline in gross margin but it looks like it has actually been more like a 300bps decline."