At a time when most high street retailers are seeing their sales collapse, Halfords actually managed to grow its like-for-like sales by a healthy 1.7 per cent in the period.
Much of that reflects a robust performance from the cycle operation where an ongoing consumer focus on leisure, the environment and fitness are driving sales. The fact that using a bike is a cheap mode of transport in a recession also helps. Tough economic conditions are boosting the group's camping offering, too, as hard-pressed consumers take cheaper holidays in the UK. Halfords is also on track to deliver £4m of cost savings during this financial year, with a further £2m of saving identified in the next financial year. That helped the company's operating margin grow 120 basis points in the period to 14.6 per cent. Moreover, robust cash flow has helped slice £70.2m from the Halfords' net debt pile.
Still, demand for SatNav's remains weak - management says that device sales are down around 20 per cent. The group's operations in Ireland and central Europe are also struggling as tough local economic conditions bite into sales - although the overseas operations generate just 4 per cent of group sales.
Numis Securities expects full-year pre-tax profit of £106.5m (£94.4m in 2009), giving EPS of 36.6p (32.4p in 2009).
HALFORDS (HFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 422p | MARKET VALUE: | £888m | |
| TOUCH: | 421-422p | 12-MONTH HIGH: | 442p | LOW: 214p |
| DIVIDEND YIELD: | 4.0% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 121p* | NET DEBT: | 42% | |
| Half-year to 2 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 410 | 49.1 | 16.7 | 5.00 |
| 2009 | 425 | 60.9 | 20.6 | 6.00 |
| % change | +4 | +24 | +23 | +20 |
Ex-div: 16 Dec Payment: 25 Jan *Includes intangible assets of £259.6m, or 123p a share | ||||
