Halfords struggles in weak consumer environment
RETAILER Halfords has announced broadly flat interim revenue of £454m, blaming the performance on the tough consumer market.
The Redditch-based firm, which is split between its retail arm and the Autocentres breakdown repair business, said gross group profit for the 26 weeks to September 30, 2011 was £246.5m (2010: £251.1m). Pre-tax profit was down 20.4% at £54.7m (2010: £68.7m).
The retail business brought in £400.6m revenue while the Autocentres operation was £53.4m. This compares to group revenue of £456.3m (Retail £407.3m; Autocentres £49.0m) for the comparable period last year.
Total operating costs increased to £189.6m (2010: £182.0m) of which Retail represented £156.0m (2010: £153.4m) and Autocentres £32.5m (2010: £27.6m). Centrally allocated expenses of £1.1m (2010: £1.1m) represent the amortisation charge in respect of intangible assets arising from the acquisition of Nationwide Autocentres in February 2010.
“The tough consumer environment in the UK and the Republic of Ireland is continuing to affect the disposable incomes and spending patterns of our customers,” said the group in its results statement.
“Halfords’ response has been to do what we do best – to offer great value through the price, quality and innovation of products and the expertise and service of our colleagues. There are clear signs that this strategy has had a positive impact in our stores through the summer, especially through the growth of cycles sales, wefit services and our newly re-branded Autocentres.
“We are carefully managing all aspects of our business and investing for the future so that we deliver optimal performance for customers and investors alike in these difficult times.”
Net debt for the half year was £140.7m, while it said that since the announcement in April of a share buy-back it has purchased 13.8m shares in the first half for £48.6m.
Sales across most operations struggled for growth. In Leisure, sales grew by 3.9% on a like-for-like basis, helped by a relaunched cycle and cycle accessory range.
Car Maintenance product sales remain subdued as motorists drove less and looked to save money. Sales declined by 3.1% LfL. However, it said its wefit services, which offer the replacement of wearing parts like bulbs, wiper blades and batteries, had continued to grow.
Car Enhancement sales fell by 9.8%, in line with the long-term trend. Halfords is the market leader in this sector and through its partnerships with branded suppliers and strong promotions, it managed to increase market share.
In-Car Audio and Sat Nav, other areas of Car Enhancement, Accessories and Car Cleaning all declined.
Halfords Autocentres’ revenues continued to improve. Total sales grew 9.0% over the half and LfL sales were up 2.7%.
Looking ahead, the group said it would be concentrating on extending its range and service advantage, investing in its store portfolio, clamping down on costs and leveraging the Halfords brand.
