REG-Halfords Group PLC Q3 Trading Update: Financial Year 2021

HalfordsAnnouncement

14/01/2021 07:00

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   Halfords Group PLC (HFD)
   Q3 Trading Update: Financial Year 2021

   14-Jan-2021 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   14 January 2021

                               Halfords Group plc

                     Q3 Trading Update: Financial Year 2021

     Strong LFL momentum continued in a challenging operating environment.

   Autocentres LFL revenue up 21.1%, with strong performances from key areas
                of strategic importance (online, services, B2B)

   Halfords Group plc ("Halfords" or the "Group"), the UK's leading  provider
   of Motoring  and Cycling  products and  services, today  announces its  Q3
   trading update for the 13 weeks to 1 January 2021 ("the period").

   Key financials

                                     Q3     Year-to-date

                                 (13 weeks)  (39 weeks)

                                  % change    % change
   TOTAL REVENUE                                  
   Halfords Group                  +11.5%      +10.0%
             Retail                +7.7%       +5.5%
             Autocentres           +30.5%      +35.6%
                                                  
   LIKE-for-LIKE ("LFL" REVENUE)                  
   Halfords Group                  +11.7%      +9.0%
             Retail                +9.8%       +9.4%
                    Motoring       -8.4%       -18.2%
                    Cycling        +35.4%      +49.1%
             Autocentres           +21.1%      +6.6%

    

   Key highlights

     • Strong trading performance  across the  quarter with  Group LFL  sales
       growth of  +11.7%, comprising  Retail LFL  +9.8% and  Autocentres  LFL
       +21.1%.
     • Autocentres sales  up +30.5%,  reflecting  a significant  increase  in
       market share, driven by our best-in-class digital operating model, our
       first  group-wide  motoring  campaign  and  expansion  of  our  unique
       Halfords Mobile Expert vans proposition.
     • In Retail;

          ◦ Cycling LFL growth of +35.4% driven by continued strength in
            Adult Mechanical, e-bikes and e-scooters, despite global
            container shortages and port congestion impacting availability.
          ◦ Motoring LFL sales down -8.4%, a pleasing performance relative to
            UK traffic volumes being approximately -25% lower than
            pre-pandemic levels as a result of lockdowns.
          ◦ Our performance cycling business, Tredz, continued to see high
            levels of demand, growing +51.2% LFL over the quarter, indicating
            a high retention of customers from Cycle Republic, which we
            exited in March 2020.
          ◦ LFL rates as we exited the quarter were lower than quarter
            averages as increased lockdowns weakened demand and supply chain
            disruption delayed stock arriving into the business.

     • We continued to perform well in areas of strategic focus:

          ◦ Net Promoter Score ("NPS") improvements accelerated in Q3, up
            +4.3 points year-on-year, driven primarily by improved customer
            journeys across all of our channels.
          ◦ Group Service-Related Sales growth of +31% with strong demand for
            motoring services and cycle repair mitigating the impact of lower
            traffic volumes.
          ◦ Group online growth of +76%, reflecting accelerated investment in
            our web platform and the continued customer shift towards this
            channel.
          ◦ B2B growth of +44%, with very strong growth in our Cycle to Work
            scheme supported by good growth in our Fleet business.
          ◦ Improved Cycling profitability, on track to exceed our target of
            improving Cycling gross margin by 300bps in FY21

    

     • In November 2019 we highlighted our intention to reshape our  property
       portfolio, to  enable us  to deliver  a more  integrated and  flexible
       customer and services  proposition and  to assist in  creating a  more
       cost-efficient business. We indicated this may result in closing up to
       10% (c.  80  sites)  of our  property  estate,  whilst  simultaneously
       growing our fleet of Mobile Expert vans. Since then, we have closed 33
       sites (including 22 Cycle Republic stores, after exiting the business)
       and will be closing a further 47 financially low-returning stores  and
       garages before the end of the financial year. The additional  closures
       will result  in  an  annualised  P&L benefit  of  over  £6m  after  an
       exceptional  cost  in  FY21  of  £25m-£30m.  Of  this,  we  anticipate
       exceptional cash costs, including lease payments, of £10m-13m in  FY21
       and FY22,  which will  be offset  by working  capital reductions,  tax
       savings and improved profit contribution.

    

     • We successfully completed the refinancing of a £180m revolving  credit
       facility  in  December  2020,  welcoming  three  new  banks  into  the
       syndicate.

    

   Graham Stapleton, Chief Executive Officer, commented:

   "We are  pleased  to have  delivered  a strong  performance  under  hugely
   challenging circumstances, including our best ever Christmas week. Despite
   a large reduction  in traffic  on the roads,  our strategically  important
   Autocentres business  saw  significant growth,  with  particularly  strong
   demand for the  services of our  growing fleet of  Halfords Mobile  Expert
   vans.

   We are currently carrying out over half a million services and repair jobs
   on cars and bikes each month, and therefore continue to play an essential
   role in keeping the UK moving during this pandemic. Throughout the
   crisis we are privileged to have been able to offer free checks and
   discounts to 239,000 NHS workers, teachers and Armed Forces staff to help
   them keep their vehicles safe and roadworthy.

   The health and safety of our  colleagues and customers remains our  number
   one priority  and  I would  like  to offer  my  sincere thanks  for  their
   unwavering loyalty and support."

   Outlook

   The UK government announced a third  national lockdown on 4 January  2021.
   As an essential retailer and  services provider, our portfolio of  stores,
   garages and Mobile Expert  vans will remain open  and continue to  support
   key workers and  customers with their  journeys. The scale  and extent  of
   this lockdown will inevitably impact demand for our motoring products  and
   services, with fewer car  journeys being made across  the UK. Although  we
   currently anticipate a less severe  impact on motoring demand relative  to
   the spring lockdown, the  cycling market is  seasonally smaller during  Q4
   and may not fully offset the impact on motoring.

   We remain confident in the  financial strength and operational agility  of
   our business to navigate the ongoing challenges arising from COVID-19. Our
   significant progress this year  will ensure that  we start financial  year
   2022 with a stronger platform for growth but, nevertheless, the  immediate
   financial impact in Q4 is uncertain.  We do not believe it appropriate  to
   provide profit guidance at this stage  but we currently intend to issue  a
   pre-close statement  during  March  2021. Our  position  with  respect  to
   business rates relief and  the Coronavirus Job  Retention Scheme is  still
   under review and  we will provide  an update when  the COVID-19  situation
   becomes clearer.

   Enquiries                                   
   Investors & Analysts (Halfords)                                          
   Loraine Woodhouse, Chief Financial Officer                               
                                                        +44 (0) 7483 360 675
   Neil Ferris, Corporate Finance Director
                                                  neil.ferris@halfords.co.uk
                                                         +44 (0) 1527 513189
   Andy Lynch, Head of Investor Relations
                                                 andrew.lynch@halfords.co.uk
                                                                            
   Media (Powerscourt)                                  +44 (0) 20 7250 1446
   Rob Greening                               halfords@powerscourt-group.com
   Lisa Kavanagh                                                            

   Conference Call

   There will  be a  conference  call for  investors and  sell-side  analysts
   beginning at 9:00am today (UK time). A copy of the transcript of the  call
   will be available  at www.halfordscompany.com in  due course. For  further
   details please contact Powerscourt on the details above.

    

   Notes to Editors

   www.halfords.com         1 www.halfordscompany.com       2 www.tredz.co.uk

   Halfords is the UK's leading provider of motoring and cycling products and
   services. Customers shop  at 440  Halfords stores,  3 Performance  Cycling
   stores (trading  as Tredz  and Giant),  367 garages  (trading as  Halfords
   Autocentres and McConechy's) and  have access to  121 mobile service  vans
   (trading as Halfords Mobile Expert and Tyres on the Drive). Customers  can
   also shop at halfords.com and tredz.co.uk for pick up at their local store
   or direct home  delivery, as  well as  booking garage  services online  at
   halfords.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

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   ISIN:          GB00B012TP20
   Category Code: QRT
   TIDM:          HFD
   LEI Code:      54930086FKBWWJIOBI79
   Sequence No.:  91438
   EQS News ID:   1160495


    
   End of Announcement EQS News Service

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