The tough retail environment has continued to weigh on Halfords (HFD), with the car and bike parts retailer’s like-for-like sales down 2.4 per cent in the six months to September. There were some bright spots – cycling sales were up, as were margins – but economic and political uncertainty led consumers to put off big-ticket purchases.
Management’s response has been to focus on growing its services business, providing non-discretionary repairs and MOTs to motorists. At present the group’s autocentres remain a small part of the overall business, comprising just 14 per cent of revenues, but Halfords announced the acquisition of Scottish garage chain McConechy’s Tyre Service alongside these results. The deal will add 60 sites to its existing network of 317 autocentres and put its staff within a 15 minute drive of half of all UK households.
The shares have lost roughly half of their value over the past year, pushing the dividend yield to a concerningly high level. As expected, management cut the final dividend to 8p (it was 12.39p in 2019), while keeping the interim flat at 6.18p. The full-year dividend will be rebased at 12p from the next financial year onwards.
Bloomberg consensus forecasts are for adjusted EPS of 20.9p at the full year, down from 24.2p last year.
| HALFORDS (HFD) | ||||
| ORD PRICE: | 154p | MARKET VALUE: | £306.4m | |
| TOUCH: | 153.7-154p | 12-MONTH HIGH: | 316p | LOW: 150p |
| DIVIDEND YIELD: | 12.1% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 192p* | NET DEBT**: | 16% | |
| Half-year to 27 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 600 | 28.2 | 11.4 | 6.18 |
| 2019 | 583 | 27.5 | 11.1 | 6.18 |
| % change | -3 | -2 | -3 | |
| Ex-div: | 5 Dec | |||
| Payment: | 17 Jan | |||
| *Includes intangible assets of £386m, or 194p a share **Does not include lease liabilities of £449m | ||||
