Halfords (HFD) knows it needs to invest to survive the current malaise blighting the British high street. So, as chief executive Graham Stapleton gets to work implementing this new strategy, a flat set of half-year numbers is actually good news. Like-for-like revenues grew by 2.5 per cent over the first-half, reflecting strong sales of e-bikes, dash cams and motoring services, while cycling sales – a retail sub-segment – rose 1 per cent, thanks to improved trading over a hot summer.
Meanwhile, the gross margin picked up slightly from 48.6 per cent to 49.4 per cent in an encouraging (although slight) reversal of a recent trend towards decline here. This stemmed from a 0.9 percentage point widening in the retail gross margin, buoyed by better sales growth and limited stock loss.
Pre-tax profits suffered after an 8 per cent rise in operating costs. But more than half of these costs derived from one-off or planned investments that aren’t expected to recur in the second half. Management also reiterated full-year guidance for flat pre-tax profits year on year.
Elsewhere, free cash flow climbed 10 per cent year on year to £34.2m – and in good news for our income tip, bosses bumped up the half-year dividend. But cover will be lower in the medium term as the group "invest[s] for sustainable long-term growth".
Broker Peel Hunt forecasts adjusted pre-tax profit of £69m and EPS of 28.2p for the year to March 2019 (from £71.6m and 29.8p in FY2018).
HALFORDS (HFD) | ||||
ORD PRICE: | 301p | MARKET VALUE: | £598m | |
TOUCH: | 300-300.6p | 12-MONTH HIGH: | 391p | LOW: 291p |
DIVIDEND YIELD: | 6.0% | PE RATIO: | 12 | |
NET ASSET VALUE: | 214p* | NET DEBT: | 18% |
Half-year to 28 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 589 | 36.6 | 14.7 | 6.0 |
2018 | 600 | 28.2 | 11.4 | 6.2 |
% change | +2 | -23 | -22 | +3 |
Ex-div: | 13 Dec | |||
Payment: | 18 Jan | |||
*Includes intangible assets of £392m, or 197p a share |