Halfords and its chief executive David Wild are having a good recession.
Earlier this month, the bikes and car maintenance retail chain posted a strong set of full-year figures: pre-tax profits rose 42 per cent to £110m, while sales rose three per cent to £832m.
The FTSE 250 business said the trend for healthy living and squeezing another year out of the family car because of the downturn had helped boost the business.
Its bike business, for instance, enjoyed a 15 per cent like-for-like sales growth, which is impressive when you consider that one in three bikes (1m a year) sold in the UK are purchased at one of Halfords’ 470 stores. Bikes and car maintenance equipment, such as sat navs, are the cornerstone of the retailer’s offering, both accounting for 30 per cent of its sales.
The group bought Nationwide Autocentres, a 224-store chain of car repair forecourts for £73.2m from buyout firm Phoenix in February; it is clear that Wild, who joined the group as chief executive in 2008, relishes the chance to expand the business after almost two years of cost cutting following the financial crisis.
During the previous 18 months or so Wild cut 250 staff. bringing the business down to 10,000 employees; closed its six loss-making stores in the Czech Republic and one in Poland; and found cheaper factories in Cambodia to source some of its bikes.
But the car servicing purchase is a chance for Wild to grow the business rather than simply make it leaner.
“Halfords is about life on the move,” says a relaxed and engaging Wild, speaking in a meeting room at the Deloitte Academy in the City. “The Autocentres acquisition is an opportunity to extend our brand.”
Wild will keep the same management team, but plans to rebrand all of the centres in the Halfords livery, and call them Halfords Autocentres.
“So far we have rebranded four to see how they perform,” says Wild. “We want to see if we can improve service levels to make the centres more family orientated. We will roll out the rest of the centres from September.”
Wild says that last year the Autocentres made a pre-tax profit of £7.5m on sales of £97m, but over the next three he plans to open another 80 forecourts and double the unit’s operating profit.
He says that the potential is clearly there. Wild explains: “Halfords has 11m customers, 10.5m of whom drive a car, and they spend on average £20 a visit. Nationwide Autocentres has 500,000 customers and they spend £150 a visit. If we convert only 10 per cent of Halfords’ customers, you can see the opportunity.”
He also points out that the car maintenance market is worth £9bn, with about 33m cars needing regular servicing and repairs.
But wild has not taken his eye off the main brand. He says there is room for another 50 Halfords in the UK. He opened 10 in 2009 and plans to open another 10 this year.
“In London we are relatively weak compared to other areas,” he says. “We are looking to fill in stores here.”
He also wants to “de-bloke” the stores to make them more welcoming to families. He has recently introduced more camping equipment to the shops, which he says are selling well and bring new customers.
Wild also says that with debts of around £155m – and annual cashflow at £95m – further acquisitions are not out of the question for Halfords. It is more a matter of when, not if.
He says: “You never quite know when the right one will come along. We have a rolling list of targets and we monitor them all the time. Sometimes the management is not ready to sell. Or they don’t want to sell to us. Or we take a look at their books and they don’t look as good as we thought from the outside. But we are always looking.”
He adds: “We also want quality businesses, we are not looking to buy businesses that we need to turn around. And we are not looking to buy abroad yet, because that complicates the process.”
Wild is also looking to boost his firm’s online sales. Currently 6.1 per cent of its sales come from the web, but Wild explains that many other retailers’ online sales are now around 20 per cent, while Argos’ web sales lead the pack at around 25 per cent.
He says: “The web plays an important role in sales because it allows customers to compare brands and get a lot of information about the product, before they come in and get the feel of something like a bike. We want to make our web site a first port of call for the products we sell.”
Wild came to Halfords after getting down to the final three on the shortlist to lead the Bradford-based supermarket William Morrison in 2006.
The top job went to Heineken’s chief operating officer Marc Bolland, who this year joined Marks & Spencer as its new chief executive.
At the time Wild was working for Wal-Mart in California, in charge of a new concept of smaller grocery stores designed to counter the imminent arrival of Tesco’s Fresh & Easy stores.
Before that Wild had spent almost twenty years at Tesco in a variety of jobs, including running its supply chain and being head of its central European division. He began his career at RHM Foods where he worked for nine years.
But Wild says he has no misgivings on missing out on the Morrison’s job that would have allowed him to lead one of the country’s largest retailers.
He says: “I have no regrets. The Halfords job came along and I wanted to come back to England with my family. And I wanted to run something that I was in charge of. This job allows me to do that.”
Wild took up his Halfords post in August 2008, a month before Lehman Brothers went bust, and for much of the time since then he has been caught up in a cost cutting battle. Fortunately for everybody, the economy has now turned, allowing firms to start expanding again. You get the feeling that Wild is getting ready to see how far and how fast he can grow a venerable British retailer.
CV | DAVID WILD
Work: 1976: joined RHM Foods in its flour and milling unit; 1985, joined Tesco, rising from buyer in its bakery department to group supply chain director in 2003; 2004: joined Wal-Mart as president of Wal-Mart Germany, then in charge of new store development in San Francisco; 2008: joined Halfords as CEO.
Education:William Hulme’s Grammar School in Manchester; read Chemistry at University College, Oxford
Family: Married with four children
Lives: Chipping Norton
Hobbies: Watching Manchester United: “I manage to get to most home games.” Collects late twentieth century art.