Halfords pumped-up its share price by over nine per cent this morning after delivering a podium performance from its retail division and rewarding investors with a special dividend.
In the firm's third quarter trading update, group like-for-like revenue for the 15 weeks to December was up 11.4 per cent. Retail performed well, growing by seven per cent but its Autocentres revenues fell by 0.6 per cent.
Services sales were up by 13.7 per cent and online revenues were the stand out performer – up 16.3 per cent.
Cycling performance grew by 7.4 per cent over the quarter, up 5.5 per cent over the first nine months of its year.
Motoring sales were up 6.8 per cent in the quarter and 3.2 per cent over the first nine months.
Shareholders were rewarded by an extra payout by way of a special dividend of 10p per share.
Why it's interesting
Halfords has snapped up new businesses over recent months. It bought online bike shops Tredz and Wheelies and announced it has bought a stake in UK mobile tyre fitting firm TyresOnTheDrive.
But the special dividend, which will see £20m returned to shareholders, was a sign that the firm's spending spree is to stop.
19 January 2017 @ 11:45amHalfords (HFD)
Meanwhile, the retail performance particularly caught the eye of some analysts.
“The big news today is the seven per cent like-for-like growth in the retail division, with a strong performance in both of the group’s key cycling and motoring markets. Halfords chief exec Jill McDonald will take heart from today’s numbers, which suggest her ‘Moving up a gear’ plan is making real progress," said George Salmon of Hargreaves Lansdown.
However, it was the online performance that stood out for David Stoddart of Edison Investment Research, labelling one of the "stars" of Halford's third quarter update.
N+1 Singer analysts called the trading update "excellent" and said a "broad range of initiatives are gaining traction".
"The strong like-for-like momentum are key to confidence in forecasts, where the markets view looks overly pessimistic."
What the company said
Chief exec Jill McDonald said:
I am very pleased with the strong sales performance across our business in the important third quarter of the year.
We continue to make good progress implementing our 'Moving up a Gear' strategy which will enable us to capitalise on the long term growth opportunities in our markets.
We benefited from growth in new ranges, our unique 'wefit' services and great execution by our colleagues over the busy peak period.