Halfords Interim Results
Posted on 19 Nov 2009
Halfords confirmed that the business achieved a like for like sales growth of just 1.7% in the period 6th April to 2nd October 2009.
The total sales revenue of £425m was generated across 469 stores, 440 of which are in the UK, including 33 "compact stores" offering the "we repair" service for cycles, with an increasing contribution coming via Halfords.com.
The specialist cycle sector achieved a 4% like for like sales growth in core business during the same period according to ActSmart's research of independent retailers. The significant volume growth via Cycle to Work schemes needs to be added to this performance to provide a full comparison.
Halfords attributed their growth to a record camping season, growth in car maintenance and ‘multi-channel' sales growth of over 50%, including Halfords.com and their ‘we fit' services. Multi-channel sales are reported as now accounting for c £22m and 5.2% of sales.
Halfords increased profit before tax - up £11.8m to £60.9m in the half year - can be attributed to increased gross margins, up to 53.3% in the period, generating a £16.1m improvement in the half year.
The benefits of a market leading position and own brand distribution has allowed the business to strengthen margins, whilst continuing its discount promotional campaign against its own RRPs and established prices in store.
The business has turned around last year's like for like sales shortfall of -1.1% in the period, but the stiffer challenge will be in their second half October 2009 - March 2010, especially the Xmas period where the business reported a l.f.l. sales reduction of -7.8% last year.
With overall Xmas expenditure expected to be down significantly, with the exception of food this year, the promotional offers are going to need to be perceived of genuine value to turn last year's slump around.
Halfords shares fell 13.8p upon announcement of the results, despite a 20% hike in the dividend to 6p.
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