Cycling has taken Britain by storm, and has certainly been revolutionary for Halfords (HFD). First-half retail sales grew nearly 7 per cent on a like-for-like basis, to £452m, driven by 16 per cent growth in the cycling segment. Halfords also expanded its cycling footprint, acquiring Boardman Bikes in the period, and will launch its Cycle Republic stores in London this Christmas.
Pedals aside, even the car maintenance and travel solutions segments did well, each reporting 4 per cent sales growth. That helped boost operating profit in the retail division by 8 per cent to £50.2m.
In the autocentres division, like-for-like sales rose 4 per cent as service standards improved and the website was overhauled. More centres will be opened this year, and there will be a focus on further improving service quality across the entire estate. Technicians will receive more training and better equipment, and they will also use more Halfords-branded products, which should leverage the supply-chain infrastructure on the retail side to boost profitability. That's welcome, given that profit from the autocentres slumped 30 per cent to £1.6m, as operating costs rose and the gross margin slipped.
Investec expects pre-tax profit of £77.7m and EPS of 31p for the full year, up from £72.8m and 28p, despite an increase in retail operating costs.
| HALFORDS GROUP (HFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 489p | MARKET VALUE: | £974m | |
| TOUCH: | 488-489p | 12-MONTH HIGH: | 515p | LOW: 420p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 176p* | NET DEBT: | 20% | |
| Half-year to 26 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 491 | 44.6 | 17.6 | 5.2 |
| 2014 | 524 | 49.6 | 20.2 | 5.5 |
| % change | +7 | +11 | +15 | +6 |
Ex-div: 18 Dec Payment: 23 Jan *Includes intangible assets of £358m, or 180p a share | ||||
