www.halfords.com
Halfords performance on track despite sales drop in Q1
For its first quarter, British motoring accessories and outdoor retailer Halfords (LON:HFD) reported a 1.9% drop in like-for-like sales. The company blamed “consumer nervousness” before May’s general election, and its decision to delay the ‘Summer Leisure’ promotional campaign due to the World Cup. Despite the drop, the company said it is still on track for earnings growth in line with its previous guidance.
Despite the like-for-like decline, the company was boosted by additional sales from its newly acquired Nationwide Autocentres business; overall year-on-year group revenues increased by 9.6%.
The company noted that margins were broadly flat and in line with its full-year guidance. Halfords said that its own ‘self-help’ measures - better buying, ‘wefit’ penetration and the addition of higher margin accessories - have offset currency and sourcing inflation headwinds.
“Actions taken to manage gross margins, reduce costs and increase efficiency, are delivering the benefits we expected. The integration of Nationwide is continuing well and I remain pleased with early performance and progress,” Halfords chief executive David Wild commented.
The company also said it continues to manage costs closely, and its programme of store colleague re-rostering had been successfully completed in the quarter. Through these measures Halfords is set to reduce annual costs by around £2m. Furthermore, the company’s new National Distribution Centre began operating during the period, and once its fully operational, in September, it is expected to reduce annual costs by £4m.
“We are cautious about the macro economic environment but, through the execution of our proven strategy, we remain on track to deliver full year earnings growth in line with previous guidance," Wild added.
