Halfords Up 10% On Olympic Boost

Published in Company Comment on 4 October 2012

Strong cycle sales help the company beat expectations.

Halfords (LSE: HFD) 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 over 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-£70 million.

Additionally -- and quite importantly -- it was reiterated that the dividend, which currently yields over 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 over 50%.

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> Nate does not own shares of Halfords. The Motley Fool does, however.

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UncleEbenezer 04 Oct 2012 , 10:38am

Oh dear. That's a lot of bike-shaped objects to sit unloved in sheds and come out once or twice a year. Which is what happens when you buy a cheap bike that's a chore rather than a pleasure to ride.

Real cyclists don't use Halfords. Except perhaps for emergencies.

TMFTheSnake 04 Oct 2012 , 10:45am

I'm not sure I would call anyone inspired to take up cycling as a result of highly trained athletes who happen to live in the same country (some of the time) winning some high profile races real cyclists.

I'd probably just call them consumers.

F958B 04 Oct 2012 , 11:01am

Hi Uncle Ebenezer

Yes - my wife wanted a bike a few years ago for pleasurable countryside riding.
Knowing very little about bikes; she initially thought that a cheap bike - 'bout sixty quid - would be fine. I suggested that once she actually tried a cheap one against an expensive one, that she'd reconsider.
She ended up choosing a Trek WSD; not cheap by any stretch of the imagination but a bike which she could enjoy riding.

I currently ride a Marin hybrid or a Trek off-road bike. The Marin hybrid fitted me better than the Trek hybrids, but the Trek off-road bike was fine.

I also have what I believe is the last (it's about 12yrs old) - or one the the last few - UK-made Raleigh titanium-framed RSP road bikes; hand-built-to-order around summer Y2K.
It's in storage nowadays but I seem to recall it weighed-in a little under 8kg and I've had it reach speeds approaching 70kph.

jackdaww 04 Oct 2012 , 11:19am


investment pudit - serious cyclist - what else do you do?

i had - i think - a claude butler about 50 years ago.

i last rode a bike about 30 years ago - had a very sore bottom - any cure for that if i buy another bike?

more seriously - is halfords a good investment?


F958B 04 Oct 2012 , 12:50pm

Hi jackdaww

A few things are listed in the last paragraph of my Fool profile.

I particularly spend a lot of time growing (experimenting with) finding the best ways to grow good yields of chemical-free, pest-and-disease-free, fruit and veg, in ordinary growing conditions, with better nutrient content and flavour than the pathetic offerings in shops.
Even "organic" food has a number of chemicals allowable; I experiment with chemical-free.

Nowadays, the focus is on weight of crop and "shelf appeal"; not on varieties which have high nutritional content, good flavour, natural immunity to pest/disease problems or tolerance of certain regional problems with soil or climate.

I contribute to a few allotment-type/grow-your-own forums.

F958B 04 Oct 2012 , 1:01pm

As for Halfords as an investment......
Not really my style.
The shares are probably somewhere between fairly valued and slightly cheap after today's jump.
If I had them in my portfolio I'd probably hold, but I wouldn't rush to add them.

BigJC1 04 Oct 2012 , 2:09pm

One swallow does not a summer make.... unless Bradley Wiggins continues making us all want a bike.

goodlifer 04 Oct 2012 , 9:52pm

Hi F958B,
I too enjoy messing about with fruit and veg in the garden, which I like to look on as a mini-ecosystem..

What's the organic, chemical-free solution to the slug?
I'm still experimenting - not very successfully!

F958B 04 Oct 2012 , 10:55pm

Hi goodlifer

Some veg have thicker, tougher skins which makes it more difficult for slugs to chew through.

Plant in barrels, or use raised beds with rough wood (unplaned) - the splinters aren't very pleasant for them to climb over, either. Old raspberry cane prunings, with their small prickly spines can be like barbed wire barricades to slugs.

Wood ash - it's strongly alkaline and gives them the equivalent of acid burns - but be aware that some plants are sensitive to the alkalinity caused by the ash - so be sparing with it!

Beer/cider traps; put a small container in the ground and put some old beer/cider in it - the slugs will often literally drown their sorrows and be found floating in it; drowned.

If all else fails - plant something the slugs will like and hope that this companion/sacrificial plant draws slug attacks away from everything else.

breelander 05 Oct 2012 , 3:32am

F958B and goodlifer,

Did you know TMF have a board for almost everything? You may like to add this one to your favourites:

goodlifer 05 Oct 2012 , 12:40pm


Many thanks - I'll certainly have a good look.

jackdaww 05 Oct 2012 , 1:14pm

f958b and other gardeners --

something in our genes ?

i have an acre of garden in west wales growing everything i can without pesti/fungicides - except sadly slug pellets.

apples include bleinham orange , wm crump, claygate pearmain, kingsacre pipin , ashmeads kernel.

this has been our worst ever year - potatoes hardly grew, few apples/plums armies of slugs/caterpillars/aphids.

ever hopeful of better seasons to come.

will give halfords a miss, look at tesco (309) and electrocomponents instead.

UncleEbenezer 05 Oct 2012 , 1:19pm

jackdaww - the right saddle is critical on a bike, and makes all the difference. A much more sensitive choice than other forms of seating. And it's not intuitive: a lot of people like a hard/narrow one and get terribly sore on a padded one. My own is somewhere between those extremes.

A man in a womans saddle, or vice versa, is a sure recipe for nether pain.

jackdaww 05 Oct 2012 , 1:56pm

is there a difference between mens/womens saddles?

i must be missing something.

F958B 05 Oct 2012 , 6:43pm

Hi Jackdaw

I ate a home-grown Ashmead's Kernel a few hours ago; wife has selected a home-grown Spartan for munching later this evening.

We've been using some Blenheims for cooking in recent weeks, but the Blenheims have now sweetened in storage and I've begun eating them raw too.

We also grow a few varieties of fruit which are so rare that 99% of the population will never have heard of them, and probably 75% of fruit growers won't have, either.
Some of our best performers are ancient, long-forgotten varieties dating back to the (pre-chemical-spray) 1600's and 1700's or earlier. They may not be super-heavy croppers, but they are disease-free and tolerate nasty soil.
In comparison, many modern "commercial" varieties are delicate inbred runts with a dependence on fungicide, insecticide and nutritional supplements.

F958B 05 Oct 2012 , 6:54pm


You asked:

".....is there a difference between mens/womens saddles....."


The lower part of a woman's pelvis is designed to "give" a bit for purposes of childbirth. It will also "give" a bit if riding with a man's saddle and may, therefore, not be a pleasant riding experience.
A man's pelvis is essentially rigid, and....er...the man's anatomy may not take kindly to certain other saddle shapes.

Some cycle shops have a thing that you sit on to leave an impression and a saddle can then be selected to approximately suit, but even that is only a starting point in the absence of experience.

I like a fairly hard (minimal padding) and fairly narrow saddle, slightly higher than the handlebars and slightly downward tilted - quite an "aggressive" riding position.
A women will often prefer a slightly wider saddle and more padding.
They may also prefer a bicycle whose frame-tube weld angles are slightly different to a man's frame angles.

As per my earlier comment I ride a Marin hybrid becase the Trek hybrids didn't "fit" me; the frame angles and other aspects of the design won't suit everyone. In the same way as some people wear 36/32 jeans, while others will need 40/30 for a satisfactory fit.

UncleEbenezer 06 Oct 2012 , 1:15am

There are many aspects of a bike to look carefully at. My current main steed is this: http://www.dawescycles.com/p-27-super-galaxy.aspx . A touring bike: a fairly relaxing ride yet good for eating the miles, stable under touring or shopping load, and good for moderate off-road, such as we have lots of here on Dartmoor.

If you look at the picture, you see the critical triangle: the relative positions of the saddle, pedals, and handlebars. Of course they're adjustable, but they work best when they're a good 'fit' for the frame geometry. For me this bike was "love at first sit": I think that slightly-sloping top bar made for a very comfy ride and is forgiving of my middle-age spread. Others have different physiques and preferences, and would choose a different bike.

Small adjustments to the geometry can make a big difference to the ride. A racer has a very fractionally steeper angle from the pedals to the seats. You might think that would be neither here nor there but it thrusts you that bit further forward, and makes it natural to pedal much harder and go fast. Other apparently-small differences can make a big difference to the whole experience of riding it.

A good bike shop is manned by enthusiasts who know all of this, and will help you find a bike that's right for you if you need it. In a shop like Halfords you might happen to get a knowledgeable sales assistant (likely a student earning a bit) but if you're less lucky you get someone who knows no more than you, and sells you a mediocre and unsuitable mount which won't necessarily even be correctly assembled.

jackdaww 06 Oct 2012 , 9:27am

f958b, uncle.eb et al

many thanks for detailed info.

re bikes -- i think i will stick to walking.

re fruit - its not generally known what wonderfull eaters blenheims are when mature.

in fact they are not well known at all sadly.

some years ago - managed to buy some excellent blenheims in tenbury worcs - local grown .

a few years later i returned to the same shop and asked if he had any blenheim orange's.

the bloke looked a bit puzzled - then said " no but i've got some nice seville's"

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