Halfords rallies as investors welcome special divi
Halfords surged on Thursday as it announced the payment of a special dividend following strong sales over the retailer’s key Christmas quarter and said it has bought a minority stake in mobile tyre fitting company TyresOnTheDrive.com.
FTSE 250
19,824.16
16:59 26/04/24
FTSE 350
4,470.09
16:59 26/04/24
FTSE All-Share
4,423.59
17:14 26/04/24
General Retailers
3,910.25
16:59 26/04/24
Halfords Group
151.40p
16:49 26/04/24
Like-for-like sales in the third quarter were up 5.9%, while LFL sales in the first 41 weeks of the year were 3.5% higher.
Retail LFL sales were 7% higher versus consensus estimates of a 3.6% increase, while Cycling and Motoring sales were up 7.4% and 6.8% respectively in the third quarter, but Autocentres saw a 0.6% drop in LFL sales.
In Motoring, the company saw continued growth in fitting services alongside strong performances in batteries, dashcams and child seats. In Cycling, there was sales growth in both bikes and parts, accessories and clothing for cycling, helped by new ranges.
Meanwhile, total group revenue was up 11.4% in the third quarter and 8.1% in the first 41 weeks of the year.
Total sales in Retail were up 13.1% in the third quarter and 1.1% at Autocentres.
Also on Thursday, Halfords announced that it has entered in to an operating agreement with TyresOnTheDrive.com to develop opportunities together to leverage each others' capability and expertise, and acquired a minority stake in the company for up to £8m.
Halfords said that following expansion of the group’s capabilities in both motoring and cycling in recent months, through the Tredz, Wheelies and TOTD investments, it does not expect to undertake further acquisitions in the near future. As a result, the board has approved a special dividend of 10p per share, or around £20m in total, which will be paid on 17 February.
Chief executive Jill McDonald said: "I am very pleased with the strong sales performance across our business in the important third quarter of the year. We continue to make good progress implementing our ‘Moving up a Gear’ strategy which will enable us to capitalise on the long term growth opportunities in our markets. We benefited from growth in new ranges, our unique ‘wefit’ services and great execution by our colleagues over the busy peak period."
Halfords, which had previously warned about the impact of a weaker pound, said it has developed “detailed plans” in response to the increase in costs from adverse FX movement and is confident that it will be able to fully mitigate the impact over time.
Liberum, which rates the stock at ‘sell’, said: “Today’s update shows significant improvement in top line momentum versus the first half reporting. While it did come on weak comps, this is a good sign that management strategic initiatives are starting to impact.”
At 0936 GMT, the shares were up 7.5% to 379.70p.