Halfords shares rocket as cycling and car maintenance push up profit

Halfords Group has posted strong like-for-like revenues for its retail arm but a decline for its autocentres, in its half-yearly report. Shares have spiked on the news, up over nine per cent this morning. (Release)

The second quarter saw like-for-like revenue for retail increase by 7.7 per cent but like-for-like revenue from autocentres down 2.1 per cent. Total group revenue was up 6.2 per cent. The group performed strongly in the areas of cycling, up by 14.2 per cent and car maintenance, up by 8.8 per cent.

Halfords is one of the largest retailers for car and bicycle maintenance in the UK, with 12,000 employees selling 10,000 product lines in stores, increasing to 30,000 when factoring in online.

Halfords said that a new chief executive officer of autocentres is to be appointed.

Matt Davies, chief executive, commented:

These are early days in our three-year transformation plan but it is encouraging to see the Retail business deliver a strong first-half performance. In Cycling we were helped by the better weather but made the most of it by ensuring we had the stock and compelling offers to meet demand. We have made a good start on many elements of our Getting Into Gear.

The interim dividend will be 5.2 pence per share, which is in line with previous expectations. Group earnings before finance costs, tax and non-recurring items were £47.8m, as compared to £44.5m in the previous period, while net debt was reduced to £50.4m from to £57.5m.

Neil Shah, analyst at Edison Investment Research, comments:
Halfords has shifted up a couple of gears in retail, more than compensating the slow turnaround of Autocentres. With discretionary spending still tight, Halfords is in pole position to move yet further ahead in retail as it has captured families' spending power ahead of economic recovery.
Investment in service training across the business lines including Autocentres will eventually translate to higher margins, allowing for margins in the short term to narrow for better long term performance.