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Halfords' profits hit by Cycle Republic exit

The retailer has experienced a surge in cycle sales
Halfords' profits hit by Cycle Republic exit

Halfords' (HFD) profits tumbled by more than a half during the year to 3 April, after the retailer recorded £32.1m in charges largely linked to the closure of its Cycle Republic and Boardman Performance Centre. Halfords, which has operated stores throughout lockdown, reported a surge in cycling sales that was offset by its motoring products performance.

IC TIP: Buy at 167p

The introduction of lockdown on 23 March resulted in a trading loss of £3.3m, with around two weeks of Halfords’ full year results directly affected. Cycling sales have since rocketed, rising 57 per cent on a like-for-like basis in the 13 weeks to 3 July. Cycling is, unfortunately for Halfords, a lower-margin and more capital-intensive business than its motoring segment, which has experienced a 45 per cent revenue decline during the same period. 

The bias towards cycling is likely to sustain in the short term, with Halfords’ autocentres business having found that nearly a quarter of drivers haven’t used their cars in the past month, negating the need for spare parts and maintenance.

Peel Hunt forecasts adjusted full year pre-tax profits and earnings per share of £18m and 7.2p in 2021 respectively, rising to £52.3m and 21p in 2022.

HALFORDS (HFD)   
ORD PRICE:167pMARKET VALUE:£ 333m
TOUCH:167-168p12-MONTH HIGH:226pLOW: 49p
DIVIDEND YIELD:3.7%PE RATIO:19
NET ASSET VALUE:184p*NET DEBT:131%
Year to 03 AprTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20161.0279.832.517.0
20171.1071.428.717.5
20181.1467.127.818.0
20191.1451.021.218.6
20201.1619.48.96.2
% change+1-62-58-67
Ex-div:na   
Payment:na   
*Includes intangible assets of £396m, or 199p a share