Halfords Group Relies on Autocentres' Revenue

LONDON -- Shares in Halfords  (LSE: HFD  )  were up 5.10 pence, or 1.6%, at the time of writing this morning following the announcement of the company's third-quarter and year-to-date trading update.

The U.K.'s leading retailer of automotive, leisure, and cycling products saw total group revenue lift 1.6% in Q3, supported by a 12.4% revenue increase in its Autocentres division. Retail, although still positive, fared less well, with a 0.1% rise in revenue.

In terms of like-for-like revenue across the 15 weeks to Jan. 11, 2013, comprising the third quarter, the group reported a 1% increase, with Autocentres contributing a 5.6% jump. Again, the retail division's performance was marginal, with a 0.4% rise -- although car maintenance was up 6.1%, cycling (-1.6%), car enhancement (-1%), and travel solutions (-8.2%) all fell.

Management explained the dips as follows: 

  • Cycling: an initially weak market for Older-Kids' and Adult-Mainstream Cycles that improved in the final weeks of the period, partially offset by a strong increase in Premium Cycle and Cycle Repairs sales;
  • Car Maintenance: a strong performance with parts sales up 13.2% and 3Bs fitting penetration, via "wefit," up 11% pts to a record 39.5%. Mild and wet-weather conditions affected the demand for winter products;
  • Car Enhancement: improved marketing and stronger range execution supported growth in both Audio and Sat-Nav;
  • Travel Solutions: reduced sales of Child Car Seats, given our focus on cash returns.

In the 41 weeks that comprise the year to date, Halfords reported a rise in group total revenue of 0.8%, again with Autocentres performing strongly with a 15.4% leap. However, it was announced that retail was down 1.2% -- and similar patterns were seen in the year-to-date like-for-like revenues. Group was up 0.3%, helped by a 8.9% boost from the Autocentres division, but retail dropped 0.9% (cycling +0.7%, car maintenance +3.6%, car enhancement -4.3%, travel solutions -7.1%).

Elsewhere in the company, it's business as normal -- Halfords' financial position remains sound with "no material change," expectations are for the short-term trading conditions to continue, while the group pre-tax profit forecast has been modestly upgraded to prior assumptions, lifting marginally to somewhere in the range of 68 million pounds to 72 million pounds.

Halfords remains in a good position financially, then, and well regarded by investors interested in high-yielding companies: with a dividend of 22 pence expected, it offers a yield of over 6%.

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