Retail repositioning reaps major rewards for Halfords

A REPOSITIONING of its retail offering has paid dividends for Worcestershire retailer Halfords, its annual results have shown.

A strong focus on its cycling and car care arms, as well as its online operation has seen group revenues exceed £1bn, a year ahead of schedule.

For the 53-weeks to April 3, 2015, the Redditch-based company also saw like for like retail growth of almost 7% and Q4 growth of 7.5% – the 11th successive quarter of growth.

Online retail sales exceeded £100m, a rise of 14.3% (Q4: +12.6%) and group EBITDA was up 8.7%. Basic earnings per share were up 13.8% and the board has proposed a full-year dividend per share of 16.5p, up 15.4%.

Dennis Millard, chairman, Halfords, said: “This was another year of strong revenue growth, this time against tough comparatives, and leading to a pleasing improvement in profitability. We are delighted to have exceeded £1bn of group revenue, a year ahead of plan, and are building a sustainable platform for future growth.

“We have more refreshed stores and launched Cycle Republic and we strengthened our authority in our core categories. Autocentres has a clear strategy under new leadership, but whilst it has delivered an improved sales performance, there is room for improvement.

“There still remains much to do in both Retail and Autocentres and FY16 will be a particularly busy year of activity and investment as we continue to focus on driving the top-line and rolling out our Getting Into Gear strategy.”

Much of the responsibility for driving the strategy will rest with new CEO Jill McDonald, who joined the firm a few weeks ago.

The financial performance shows sales of £1,004.9m, up 6.9%, with like-for-like revenue growth of 6.8%. Total operating costs rose by 5.7% primarily as a result of the strong sales volumes, the logistics transition and investments made in key areas of the business.

Investment in the expansion of car maintenance arm Autocentres continued as the business added nine new centres to its network, although this was offset by the closure of seven. It also opened four Cycle Republic shops.

Group EBITDA were up 8.7% to £109.9m, with EBIT at £84.6m, which compares with £77.8m in the prior year. Pre-tax profit was £81.1m.

Cashflow performance was said to be robust with increased operating cashflows more than offsetting the impact of its capital expenditure programme and the acquisition of Boardman Bikes. Group inventory levels were reduced marginally, despite the addition of Boardman Bikes and continued strong retail sales growth.
Net debt at the end of the year was down £37.8m at £61.8m.