REG-Halfords Group PLC Halfords Group PLC: Proposed closure of Cycle Republic and Boardman Performance Centre

HalfordsAnnouncement

16/03/2020 09:05

============

   Halfords Group PLC (HFD)
   Halfords Group PLC: Proposed closure of Cycle Republic and Boardman
   Performance Centre

   16-March-2020 / 09:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

                                                                             

   16th                   March                   2020                       
                                                                    

                                        

                              Halfords Group plc 

       Proposed closure of Cycle Republic and Boardman Performance Centre

    

   Halfords Group plc ("Halfords" or "The Group") today announces a  proposal
   to close the  operations of  Cycle Republic and  the Boardman  Performance
   Centre ("Cycle  Republic") following  a strategic  review of  the  Group's
   cycling businesses.  

    

   Our proposal links directly to our  strategic update in November 2019.  At
   the time,  we outlined  our intent  to improve  the profitability  of  our
   cycling business and the proposed  closure of Cycle Republic reflects  the
   challenging economics  of  a  store-based  dedicated  performance  cycling
   operation. Exiting a low-returning, stock intensive business allows us  to
   improve our return on capital  whilst freeing up investment and  resources
   to continue to drive  our services-focused strategy,  with an emphasis  on
   accelerating the growth of our  motoring businesses. The proposed  closure
   is expected to be marginally accretive  to earnings in FY21 and will  also
   enhance cashflow and  net debt  on an ongoing  basis, principally  through
   lower working capital requirements.

    

   Performance Cycling is  an important category  for Halfords. We  currently
   serve the enthusiast cycling market through Tredz, a predominantly  online
   business, and through  Cycle Republic,  a commuter led,  store and  online
   offer. Going  forward, we  believe we  will better  serve this  market  by
   singularly focusing our  investment and  resources into  the Tredz  brand,
   which has both a differentiated and specialist customer proposition and  a
   superior business model in this part of the cycling market.

    

   With investment in the Tredz business, alongside our core Halfords  Retail
   cycling business, we believe we will be uniquely placed to serve both  the
   enthusiast and the mainstream customer in  a more economic way than we  do
   today.

    

   From today we will launch a  consultation process with the 226  colleagues
   affected by the  proposal, with  a view to  mitigating redundancies  where
   possible. We are also actively  exploring opportunities to sell the  sites
   as a going  concern. Subject to  the outcome of  current negotiations  and
   consultation, the stores are  expected to close during  the first half  of
   FY21.

    

   The proposed closure does not affect the previously stated profit guidance
   for FY20. In the year  ended 29 March 2019 Cycle  Republic made a loss  of
   £4.3m, with the  FY20 loss expected  to be materially  smaller. The  gross
   assets attributable to Cycle Republic were £27.0m as at 27 September 2019,
   which includes £14.4m relating to a right of use asset under IFRS16. There
   will be  pre-tax exceptional  costs  associated with  the  implementation,
   subject to the outcome  of the consultation  process, which are  currently
   estimated to be £25-35m, with the majority being cash costs. The  majority
   of these cash costs relate to the existing retail store lease arrangements
   and therefore will be  incurred over the period  of the remaining  leases,
   which have an average length remaining of 4.9 years. All numbers  provided
   are on a pre-IFRS16 basis, unless otherwise stated. A further update  will
   be provided in Halfords Preliminary Results release on 2 June 2020.

    

   Graham Stapleton, CEO said:

    

   "The Board has come to the difficult, but necessary, decision to propose
   the closure of Cycle Republic, our retail store-focussed performance
   cycling brand.

    

   This proposal is not a reflection of the hard work of our Cycle Republic
   colleagues, who I would like to thank for their commitment and passion in
   serving our customers. We are now moving into a period of consultation
   with impacted colleagues with a view to mitigating as many redundancies as
   possible.

    

   Going forward we propose to focus our investment and resources in Halfords
   and Tredz, through which we will deliver market-leading specialist
   propositions for both mainstream and enthusiast cyclists via a business
   model that improves our overall economics."

    

   Enquiries

   Investors & Analysts (Halfords) 

   Loraine Woodhouse, Chief Financial Officer  

   Neil Ferris, Corporate Finance
   Director                                                              +44
   (0) 7483 360 675                                                    

    

   Media (Tulchan) +44 (0) 20 7353 4200

     Will Palfreyman

     Will Smith

    

   Conference Call

   There will  be a  conference  call for  investors and  sell-side  analysts
   beginning at  10.30am today  (UK  time). The  participant dial-in  is  +44
   (0)333 300 0804 or 0800 358 9473 (toll free). The PIN is 52437927#.

    

   Reporting Calendar

   On 2 June 2020 we will report our annual results for the 53 weeks ending 3
   April 2020 along with an update on our plans for FY21.

    

   Notes to Editors

    

   www.halfords.com                           
     1 www.halfordscompany.com             
    2 www.halfordsautocentres.com     

    3 www.cyclerepublic.com               
     4 www.boardmanbikes.com                       
     5 www.tredz.co.uk           

    

   Halfords is the UK's leading provider of motoring and cycling services and
   products. Customers shop  at 446 Halfords  stores, 26 Performance  Cycling
   stores (trading as Cycle Republic, Tredz, Boardman and Giant), 369 garages
   (trading as Halfords  Autocentres) and  have access to  75 mobile  service
   vans (trading  as Halfords  Mobile  Expert). Customers  can also  shop  at
   halfords.com, cyclerepublic.com and tredz.co.uk for pick up at their local
   store or direct home delivery, as  well as booking garage services  online
   at halfordsautocentres.com.

    

   Cautionary Statement

    

   This report contains  certain forward-looking statements  with respect  to
   the financial condition, results of operations, and businesses of Halfords
   Group plc.  These statements and  forecasts involve risk, uncertainty  and
   assumptions because they  relate to events  and depend upon  circumstances
   that will occur in the future.  There  are a number of factors that  could
   cause actual  results  or developments  to  differ materially  from  those
   expressed  or   implied  by   these  forward-looking   statements.   These
   forward-looking  statements  are  made  only  as  at  the  date  of   this
   announcement. Nothing in this announcement should be construed as a profit
   forecast.  Except as required by law, Halfords Group plc has no obligation
   to update the  forward-looking statements or  to correct any  inaccuracies
   therein.

    

   ══════════════════════════════════════════════════════════════════════════

   ISIN:           GB00B012TP20
   Category Code:  REP
   TIDM:           HFD
   LEI Code:       54930086FKBWWJIOBI79
   OAM Categories: 3.1. Additional regulated information required to be
                   disclosed under the laws of a Member State
   Sequence No.:   52537
   EQS News ID:    997895


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

    6 fncls.ssp?fn=show_t_gif&application_id=997895&application_name=news&site_id=refinitiv2

References

   Visible links
   1. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=dc934a09a1192ec0a1dd5bc4c5b4e7f2&application_id=997895&site_id=refinitiv2&application_name=news
   2. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=34c067327218f9fdaa7059abab2d3178&application_id=997895&site_id=refinitiv2&application_name=news
   3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=d32c1437e04b39b974679c41f3533039&application_id=997895&site_id=refinitiv2&application_name=news
   4. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=a4639b0dc1388a3a55b92a77548868bb&application_id=997895&site_id=refinitiv2&application_name=news
   5. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8d9c0d9b41eb2335e0a4ce386dba87e7&application_id=997895&site_id=refinitiv2&application_name=news


============