There's good news and bad in bicycle retailer Halfords' (HFD) half-year numbers. On the plus side, like-for-like sales in the cycling division recovered strongly after success for Team GB at the Rio Olympics and a mild September, which helped extend the summer season. Underlying cycling revenues rose 4.6 per cent during the first six months of the financial year, but grew a massive 16 per cent in the last six weeks of the period alone. Overall, like-for-like retail sales rose 2.4 per cent over the first half.
But that didn't stop pre-tax profits falling significantly short of analysts' expectations, which explains the 7 per cent drop in the share price on results day. Cycling sales are typically lower margin, but this was exacerbated by a particularly aggressive summer sale, according to brokerage Peel Hunt. The recent devaluation of sterling has also caused serious cost inflation, thus increasing the pressure on margins, although chief executive Jill McDonald says she is confident the group can meet full-year consensus profit forecasts of £74.8m.
Analysts at Peel Hunt say "this is a stretch" and so expect pre-tax profits of around £74m for the year ending March 2017, giving EPS of 30.1p, down from £81.5m and 33.4p in FY2016.
| HALFORDS (HFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 320p | MARKET VALUE: | £637m | |
| TOUCH: | 320-320.3p | 12-MONTH HIGH: | 452p | LOW: 300p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 209p* | NET DEBT: | 16% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 534 | 46.4 | 19.2 | 5.66 |
| 2016 | 567 | 39.1 | 15.9 | 5.83 |
| % change | +6 | -16 | -17 | +3 |
Ex-div: 15 Dec Payment: 20 Jan *Includes intangible assets of £392m, or 197p a share | ||||
