Why Halfords Group Still Gets My Motor Running

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LONDON -- If you walked up to a man on the street and asked him the following question, what do you suspect his answer would be?

"Who are Halfords, and what do they do?"

I'd wager a Mars bar -- or maybe even a full-size Toblerone -- that his answer would be: "A shop that sells car parts," or a derivative thereof. And for the most part, he'd be absolutely correct.

I have been a Halfords  (LSE: HFD  ) shareholder for just over a year now, and it's certainly been an interesting time for the group. In July last year, then-CEO David Wild was axed, which actually led to a rise in share price for a time. Shortly after, they appointed Matt Davies as new CEO. Davies was brought in with a view to revamp the Halfords brand, starting in particular with its subpar customer service efforts (something he had great success doing at his previous company, Pets at Home). Shortly after, the marketing chief and the advertising agency were both let go, signalling the start of a complete brand rethink.

So how is Halfords doing since? Well, first things first, since May last year, the share price has risen from around 242 pence to 349 pence. A not-too-shabby rise of nearly 31%. Combine that with a healthy dividend payout, and you have yourself a great all-rounder.

But if we dig a little deeper into its recent trading update, are things still as rosy as they seem? Well, let's go back to my earlier question... If you indeed consider Halfords to be purely about retail, then the results probably aren't much to get excited about. Cycling sales were down nearly 9%, Car enhancement was down by 4%, and Travel solutions down by 5.5%.

But Halfords is more than just a retailer. It now has its own chain of Autocentres, which is where we are seeing the most exciting growth prospects. Despite like-for-like turnover in this area of only 0.8%, Halfords are now planning on opening a further 20-30 more locations this year. I imagine that the "new brand" that it's building will incorporate this still relatively new and unknown area, to hopefully spread the word that Halfords isn't all unhelpful staff wearing Day-Glo orange and black uniforms -- but a pure "one-stop shop" for all things automotive. And one other exciting thing to consider: Are there any other household names out there in this space that are looking to do the same? No -- so its market share could remain untroubled for a while yet.

Are you thinking that Halfords would be a good option to have in your retirement portfolio? If that's something you're currently building, then I urge you to download our free and exclusive wealth report, "5 Shares to Retire On." Inside are a mix of reliable dividend payers, and great growth ideas, to suit everyone's portfolio!


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10/21/2016 11:52 AM
HFD $343.39 Down -0.91 -0.26%
Halfords Group CAPS Rating: No stars