Halfords Up 10% on Olympic Boost
LONDON -- Halfords (LSE: HFD.L) went for a double and sent its shares up 10% this morning, as it announced a new CEO and first-half results well ahead of expectations.
After a sopping wet first quarter, which saw sales drop more than 5%, the sunnier and Wiggins-ier second quarter was a welcome relief. Thanks in part to the success of Bradley Wiggins in France and Team GB's showing on the Olympic velodrome, cycling sales in the second quarter were up almost 15% from a year ago. Along with 20% growth in sales from Halfords Autocentres, company sales were up 6% in the second quarter.
Despite this comeback performance, management remains level-headed, voicing caution about second-half sales as consumers remain under pressure. Management did, however, softly raise guidance, now expecting to come in at the upper end of the previously guided profit range of 62 million to 70 million pounds.
Additionally -- and quite importantly -- it was reiterated that the dividend, which currently yields more than 7%, would be maintained. And the markets rejoiced.
Putting numbers aside, the appointment of former Pets At Home CEO Matt Davies removes some uncertainty that was surrounding the company after former CEO David Wild was ousted in July as the board felt the company needed to pursue a new strategy.
Part of that strategy will be to rebuild its reputation for customer service that some say eroded under Wild's regime. With a focus on training employees and raising awareness of the company's "Wefit" installation offering, as well as building out its Autocentres business, Halfords' management hopes to ward off price competition from online retailers.
It remains to be seen if this can be achieved and if Mr. Davies is the right man for the job, but for now the market's fears that Halfords was on its last leg appear to be calmed. For those brave enough to buy in during the darkest days in July -- not me, unfortunately -- the shares are up more than 50%.
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