Halfords Group unveils turnaround plan as profits fall

UK automotive products retailer Halfords Group announced a strategy to improve its sales after reporting flat full-year revenues and a fall in profit.

The plan, called 'Getting Into Gear 2016', will include re-positioning the retail business to focus on sales growth and sustainable profitability. The company will upgrade its stores, expand its car repair business Autocentres by 20 to 30 new centres a year and improve its online offering.

It came after the group posted a pre-tax profit, before non-recurring items, of £72m for the year ended March 31st, down 21.9% on the previous year.

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Revenues were broadly flat with a 1.0% increase to £871.3m. A 13.5% jump to £125.8m in Autocentres revenue was offset by the retail division's 0.9% decrease to £745.5m.

The company also slashed its final dividend by 35% to 9.1p per share, taking its full-year dividend to 17.1p, down 22.3% on the year.

Halfords blamed poor weather in the first and last quarters, a 5.3% rise in retail store operating costs and a decline in gross margins in the Autocentres business by 221 basis points to 63.7%.

"Halfords Retail sales performance in fiscal year 2013 reflected a demanding trading environment and demonstrated how we can exploit our offer with investment and by focusing on areas of opportunity," said Chief Executive, Matt Davies.

"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 on-going cost inflation."

He said the Getting into Gear strategy will inevitably reduce retail profits in the short term but bring about long-term growth. Halfords is targeting group revenue of £1.0bn by 2016.

"This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities," Davies said.

Shares fell 12.06% to 348.50p at 10:11 Thursday.

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