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Halfords increases profits despite retail sales drop


Automotive maintenance and bicycle products firm Halfords announced today a revenues rise of 4.6 per cent for its full-year period despite tough retail trading.

In the 52 weeks to April 1st 2011 underlying profit before tax increased 7.2 per cent year-on-year to £125.6 million, in line with consensus estimates, but retail sales fell 5.2 per cent.

Profits were boosted by the company’s rebranded and expanded autocentre business reporting strong sales since it’s re-launch in March, a nine per cent growth in online sales and effective cost cutting & margin increases.

David Wild, CEO, commented on the results: “This has been a challenging year for customers. Nonetheless we have increased profits through a clear focus on costs and margins.

“The group has also made significant operational progress through the successful completion of change initiatives, including reconfiguration of the group’s warehouses and distribution network, remodelling staffing structures and the rebranding and re-launch of our autocentres business.”

Strong growth in profits means that Halfords’ total dividend has risen ten per cent compared to 2010 to 22p per share, underlying earnings per share grew 8.8 per cent to 4.3p and its net debt has almost halved to £52.3 million.

During the first nine weeks of this financial year to June 3rd retail sales managed to grow again by 0.8 per cent year-on-year, although this was entirely due to a spring double-digit boost to leisure product sales, offset by a decline of 10.6 per cent in car enhancement and three per cent drop in car maintenance.

With the boost of the royal wedding and extra bank holidays over however sales are likely to continue to drag in Halfords’ main segments but Wild is confident that its healthy financial position and strategy, exemplified by its new “that’s helpful that’s Halfords” marketing campaign, will steer it through troubled waters.

“While the tough trading environment is likely to continue, we seek to build on this momentum through our clear strategy that delivers value for customers by a combination of great prices, expert service and innovative products with appropriate margin investment,” Wild explained.

“The strength of our cash generation and our balance sheet means that we can pay material dividends, return capital to our shareholders and retain flexibility.”

Published on Thursday 09 June by Editorial Assistant

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