Halfords Cuts Dividend by 35%

LONDON -- Halfords (LSE: HFD  ) today released its end-of-year results, announcing that group revenue is up 1% to £871 million relative to this time last year. But this was mainly due to a 14% gain in revenue by its Autocentre arm; revenue from its retail business actually dropped by nearly 1%.

But it was in profit and dividends that we saw a real slump: Profit before tax was down 22%, while the final dividend was cut by a staggering 35% to just more than 9 pence (compared to 14 pence in 2012).

New chief executive Matt Davies commented: 

Halfords Retail sales performance in FY13 reflected a demanding trading environment and demonstrated how we can exploit our offer with investment and by focusing on areas of opportunity. The Autocentres performance was satisfactory against a backdrop of a declining market and particular challenges in the fleet sector. The fall in Group profitability however illustrates the pressing need for sustainable revenue growth to offset ongoing cost inflation.

Halfords, however, does seem to be remaining growth-focused -- highlighted by the plans to open 20 to 30 new Autocentres per year. Davies also announced the beginning of the new "Getting into Gear 2016" initiative, which is primarily focused on improving its much-maligned customer experience and service efforts. This will include some heavy spending on in-store refits, which will most likely affect short-term retail profitability but will hopefully improve its chances of obtaining sustainable long-term growth.

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