LONDON (Alliance News) - Cycle and car maintenance product retailer Halfords Group PLC Thursday said its profits and revenues rose in its last financial year, as the UK's growing passion for cycling - and for online shopping - plus a revamp of its products, drove strong growth across the business.
For the year ended March 28, the retail chain recorded pretax profit of GBP72.6 million, up 2.3% from GBP71.0 million a year earlier, driven by a 7.9% increase in revenues to GBP939.7 million from GBP871.3 million last year.
Shares in Halfords rose to the top of the FTSE 250 in early trading Thursday, up 8.5% at 479.00 pence.
Halfords is one year into its three-year ‘Getting into Gear’ revamp programme, refocusing the shops on the most successful lines of cycles and car maintenance products, giving its staff better training and customer service skills, and improving product ranges and stock availability, which has so far paid off, it said. During the year, the group spent GBP30.4 million in capital expenditure and continued to expand its autocentres business, by adding 20 net centres.
"We are getting better prepared to delight our customers both in-store and online, and we’re making good progress with our refreshed stores, our infrastructure and the product range. Despite challenging sales comparatives ahead, I now anticipate Halfords delivering a FY15 Group EBITDA ahead of FY13," said Chief Executive Matt Davies in a statement.
Halfords said it expects to its retail gross margin to decline by between 25 basis points and 75 basis points in the 2015 financial year, with operating costs to increase by between 4% and 5%. It said it will invest around GBP35 million in capital expenditure in its retail division and GBP8 million in its autocentres business.
The group left its final dividend for the year unchanged at 9.1 pence, bringing its total dividend for the year to 14.3 pence, down 16% on the prior year.
On a like-for like basis, revenue in the year rose by 6.5%, driven by a 7.6% like-for-like increase in its retail division, on the back of strong growth in cycling sales, while its autocentres division saw a slight 0.1% sales dip on a like-for-like basis.
"Cycling was the largest retail category by sales and was the standout performer throughout the year... reflecting improved execution, a successful Christmas for children’s bikes, more-conducive
weather conditions and sustained interest in cycling as a leisure activity," the company said in a statement.
"A Summer Of cycling lies ahead, with major launches imminent within the Halfords cycle range," it added.
"Halfords has reported pretax for 2014, 3.9% ahead of consensus with an eye wateringly strong exit to the year from cycling up 42% on a like-for-like basis in the fourth quarter. With a summer of cycling ahead and weak car maintenance comparables, we expected good sales momentum to more than offset the increased cost guidance and mix impact on gross margin," said Investec analyst Kate Calvert in a research note Thursday.