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Halfords Group (LSE:HFD) share price looked like a downhill slope of the Tour de France today as it continued its descent from the 546.00p peak it had reached in June 2010. After the company published its preliminary year end results, its price on the LSE continued coasting downhill to 247.80p, 28.10p (10.8%) lower than yesterday’s close of 275.90p. On 31 May 2011, one year ago today, the stock was at 400.70p.
Report
Halfords reported a 20% decline in adjusted pre-tax profit for the year ending 30 March 2012, down to £94.1 million from £118.1 million in FY2011. Total revenue declined from £869.7 million to £863.1 million. Non-adjusted pre-tax profit declined by 26.6% from £125.6 million to £92.2 million, and although its retail sales dropped 2.3% from £769.7 million to £752.3 million, Halfords’ Autocentres generated a 12.9% increase in sales from £98.1 million to £110.8 million. Profit from cycling & leisure increased 9.7%, and service revenue increased 22.6%. The report indicated that sales thus far into the 2013 fiscal year have been “very disappointing” to the extent that Halfords has “not seen the usual seasonal demand for cycling and outdoor leisure products.”
Observations & Comments
There is some consensus that the decline in sales has been a result of the recent record inclement weather that has affected so much retail business in the UK. CEO David Wild put his spin on the situation, saying, “In a challenging consumer environment we have made good progress in our key growth areas of Leisure, including Cycles, Fitting Services and Autocentres. Our success in these categories and our detailed market research demonstrates how customers appreciate the help and value we offer and our opportunity for further growth. As a result we are evolving our strategy to focus on three strategic pillars so that we become the Friend of the Motorist, the Best Cycle Shop in Town and the Starting Point for Great Getaways. In each of these areas we believe we have a unique end to end solution and are well positioned to increase our share in significant markets.”
Despite Mr. Wilds’ enthusiasm and the impact of the bad weather, analysts at Barclays had a slightly different take on the situation, saying,
“The release was not surprising given the very bad weather and the impact it had to all retailers in the UK but investors will likely be reluctant to accept management’s optimism at face value before they witness any positive results.”
Mr. Wild asserted that the company is embarking on an evolving strategy that will “accelerate the evolution of Halfords from a traditional retailer to contemporary solutions provider” and that this effort will not only contribute to the financial growth of the company, but also “create up to 1,000 new jobs.” In a previous report, the company had indicated that it will be investing £6.0 million into marketing, bikes, and staff training.
Company Spotlight
Halfords is a retailer of automotive and leisure products in the United Kingdom and Ireland and an independent operator in garage service and auto repair in the UK. [9] The company has 467 retail shops and 260 Halfords Autocentres.
References
↑ Official Company History
↑ Retail Gazette
↑ The Guardian
↑ Reuters
↑ Retail Week
