Halfords has posted a 7.5% rise in like-for-like sales for the first quarter. Retail Week rounds up analysts’ thoughts on the cycling and car parts retailer’s performance.
“While Halfords was up against weak comparables in Q1, this is a very strong underlying performance nevertheless and we believe it also reflects management actions within the business. We feel the new ‘Getting into gear - 2016’ plan is absolutely the right strategy to rebuild Halfords and return it to growth, though the short term investment/cost necessary to put the business on a solid footing and correct years of brand underinvestment means that there will be another step down in profits in FY14.” – Kate Calvert, Cantor
“Halfords’ massive sale growth illustrates how much more favourable the weather in April to June 2013 was compared to the same period in 2012. This time last year Halfords registered a like-for-like retail decline of 7.8%, with cycling down 9.6%. This time around, with more stable weather and some improvement to the offer, sales have rocketed against the weak comparatives: cycling in particular growing by 15.5%. Another sign that Halfords is on the right track is provided by its online retail sales; up 15.5%, with Cycling making up over half of online revenues. Improvements to this part of its offer will be crucial as it continues to take the battle to specialists such as Evans, Cycle Surgery and Wiggle.” – Matt Piner, Conlumino
“The good-looking Q1 figures from Halfords today compare with a weak time last year, when overall LFL sales slumped by 7.5% in the rain, but the 8.8% LFL [retail] sales bounce this year is still pleasing and the swing is particularly noticeable in cycling sales, with a near 10% fall in Q1 last year turning into a 15.5% increase this year, with cyclist responding to the drier weather. There were some weak spots elsewhere, eg car seat sales and Autocentre fleet sales, so management are likely to keep their feet on the ground on the 9.30am conference call with analysts.” – Nick Bubb, independent
“Cycling continues to be a growth industry and management is emphasising the repair offer (up 32.1% in Q1). With accessories and clothing joining the sales mix, we expect the cycling part of the business to be able to deal with the tough Olympic comp in Q2 and Q3. That car maintenance continues to prosper is due to improved service levels, making the fitting offer much more credible. The comp here was tough (LFL was +1% in Q1 last year), and this is of especial significance given the higher margin that can be earned here.” - Jonathan Pritchard, Oriel Securities
“While this was a strong quarter, demonstrating that the early retailing/merchandising initiatives are having an impact, it was clearly flattered by the poor weather last year. With tougher quarters to come, we will need to see a genuine reaction to the initiatives being implemented for ‘Getting into Gear 2016’.” - Andrew Wade, Numis
“Retail LFL of 8.8% is significantly ahead of our 3% forecast (consensus c.4%). Within retail, car maintenance is a particular highlight and cycling is also strong albeit against a weak comparative. A tough trading environment [at autocentres] was flagged at the prelims, and Q1 recorded -0.9% LFL (versus our +1% forecast). Fleet remains the key challenge, and management are addressing this. Longer-term, we continue to view the market positively, but retain our FY14E forecast for flat EBIT.” - Bethany Hocking, Investec