Halfords Profit Rises 11% as Margins Offset Consumer Cuts
Halfords Group Plc (HFD), a U.K. seller of car parts and bicycles, said profit rose 11 percent last year as improved margins offset a squeeze on consumer spending. The shares rose the most since February 2010.
Net income for the year ended March 31 increased to 85.5 million pounds ($140 million), or 40.2 pence a share, from 77 million pounds, or 36.6 pence, the Nottingham-based company said in a statement today.
“Since the beginning of the 2012 financial year, the underlying U.K. consumer environment has remained difficult,” Chairman Dennis Millard said in the statement. “We have drawn up our plans for the year ahead on the assumption of a challenging environment for the remainder of the year.”
The biggest squeeze on public spending since World War II, coupled with tax rises, is curbing consumers’ willingness to spend money on things such as car maintenance. Halfords’ same- store sales fell 5.5 percent during the year.
The shares rose as much as 9.4 percent and were up 35.2 pence, or 8.9 percent, at 433 pence, at 8:58 a.m. in London, paring the decline over the past year to 13 percent.
“Consumers are adjusting to the new reality,” Chief Executive Officer David Wild said on a conference call with reporters today. “I don’t think consumers are expecting things to get better for a few years.”
The late Easter holiday and warm weather helped same-store sales be “just positive” in the first nine weeks of the fiscal year, he said. Same-store sales of bicycles rose 16 percent in the nine weeks.
“Current trade represents a robust start to the year,” Peel Hunt LLP analyst John Stevenson said in a note to clients today. He rates the shares “hold.”
Halfords raised its total dividend for the year 10 percent to 22 pence a share. It’s returned 20.7 million pounds so far to investors under a 75 million-pound share buyback program.
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