Retailer Results / Halfords



Trading Update
15-week period to 1 July 2016

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Trading Update
15-week period to 15 January 2016


• Group LFL +0.3 per cent
• Retail LFL flat
• Autocentres LFL +1.9 per cent
• In Cycling, growth in sales of bikes and cycle repair more than offset a small decline in parts, accessories and clothing
• In Motoring, Car Maintenance sales were impacted by the warm weather, partially offset by a strong performance in sales of wiper blades and bulbs, and continued growth in fitting services
• Autocentres increased service, maintenance and repair revenue, but was impacted by lower tyre prices
• Profit expectations for the current year are unchanged


As expected, these figures have been deflated by the unseasonably mild winter which held back sales particularly across the Motoring part of the business. So given the challenging conditions and tough comparables, flat performance in overall LFLs is fairly impressive.

In context of the flat growth, the performance of the online business is also likely to have taken a hit, given the consumer shift to internet sales over Christmas, and with over 50 per cent-70 per cent of online orders going through the click-and-collect channel, footfall is likely to have suffered as a result.

However, there is no change to the management’s expectations of Group Profit Before Tax for the full year, which we expect to be in the range of £78-82m. It is anticipated that Retail gross margin for the full year to be a decline of -25 to -75bps, however full year Retail operating cost growth is expected to be in the range of +1.0 to 2.0 per cent (previous guidance: +2.5 to 3.5 per cent).

Jill McDonald, Chief Executive, commented: "We are pleased with the Group's performance, given the unprecedented weather conditions. Particularly pleasing was the strong growth in service-related sales and a return to LFL growth in Cycling. We achieved a record day online over the Black Friday weekend, our highest ever day for total sales on 23rd December and further improvements in customer service metrics. In Autocentres we achieved a 9th consecutive quarter of LFL growth. I would like to thank our colleagues for all their hard work over the busy Christmas period."



Trading Update
26 weeks to 2 October 2015


• Group revenue +1.8 per cent with Retail LFL +1.4 per cent and Autocentres LFL + 3.3 per cent
• All Retail categories grew except Cycling, due to weak sales in July and August
• Motoring performed well, especially Car Maintenance with sales up 6.5 per cent
• In-store service income up 14.0 per cent, driven by 3Bs fitting and Cycle Repair
• Group PBT down 5.9 per cent, in line with expectations
• Net debt down £7.9m year-on-year to £62.4m
• Interim dividend per share of 5.66p, up 2.9 per cent


Group sales of £533.5m were up 1.8 per cent, with Group gross profit up by 1.6 per cent. Total operating costs rose by 3.5 per cent reflecting investments in the 3-Gears training programme and associated wage uplifts, an increase in depreciation, and the move to more frequent deliveries to stores, which was implemented in October 2014.

Group earnings before finance costs, tax and non-recurring items ("EBIT") were £47.9m, which compares with £51.2m in the prior period.

Retail sales were £458.0m, up 1.3 per cent on the previous year and 1.4 per cent on an LFL basis.

Cycling LFL revenues declined by 2.9 per cent for the half. The second-quarter Cycling LFL was -7.6 per cent, an improvement on the -11.0 per cent reported for the 8 weeks to 28 August 2015. The majority of the Cycling year-on-year sales decline was in a 4 week period from mid-July to mid-August and reflected particularly strong comparatives exacerbated by poor weather, discounting across the market and annualising against the Yorkshire Grand Départ of the Tour de France. Cycle Repair sales increased by 24.0 per cent, reflecting the investments made last year in equipment and trained colleagues.

Online Retail revenues grew by 0.9 per cent and represented 12.1 per cent of total Retail sales (H1 FY14: 12.2 per cent). 90 per cent of online orders were collected in store, reflecting the on-going importance of the physical store network in the evolving customer journey. Home delivery sales increased by 34 per cent, helped by the introduction of the Halfords eBay site in November 2014.
In the period, total in-store service income, included within all of the above categories, increased by 14.0 per cent to £12.9m, with the majority of revenues emanating from 3Bs fitting and Cycle Repair services.

Jill McDonald, Chief Executive, commented: "In the first half the motoring side of the business performed well and in-store service sales grew strongly, reflecting our focus on this key area of differentiation. The Cycling performance in the second quarter was disappointing and, given the seasonal mix towards Cycling during the summer, this contributed to the decline in Group profitability for the period. Looking forward, there are plenty of reasons for us to remain confident that the Cycling market will continue to grow over the long-term”.

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