Halfords' saw its shares bounce sharply despite reporting a fall in half-year pre-tax profits and an admission from chief executive David Wild that there was no visibility on when the market would improve.
"It is impossible to predict when trading conditions will ease", said Mr Wild, pointing to the oil price and its effect on inflation as the major uncertainty. The company said that motorists were continuing to defer all but the most essential maintenance on their cars, which meant underlying sales of parts fell 3.1 per cent, with sales of car enhancement products like satnavs and stereos falling even more sharply, down 9.8 per cent.
However, relaunched cycle ranges helped it grow leisure sales by 3.9 per cent – encouraging, as that segment had previously suffered from merchandising issues. Its Autocentre garages are also doing well, as investment in rebranding advertising translated into a 2.7 per cent increase in like-for-like sales. But higher marketing costs also meant operating profits in the division slipped from £4.8m to £3m, offsetting an improvement in gross margin from better parts buying.
Peel Hunt expects full-year underlying pre-tax profit of £100.1m and EPS of 37.3p (£125.6m and 42.7p for 2011).
HALFORDS (HFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 347p | MARKET VALUE: | £704m | |
| TOUCH: | 348-349p | 12-MONTH HIGH: | 460p | LOW: 266p |
| DIVIDEND YIELD: | 6.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 142p* | NET DEBT: | 49% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 456 | 68.7 | 24.1 | 8.00 |
| 2011 | 454 | 54.7 | 19.7 | 8.00 |
| % change | – | -20 | -18 | – |
Ex-div: 21 Dec Payment: 27 Jan *Includes intangible assets of £346m, or 170p a share | ||||
