Halfords shares were riding higher on Tuesday after the group released its first half-year results, which revealed no growth compared to the previous year.
However, investors were clearly pleased that Halfords managed to maintain the same sales level, given the group’s strong growth in the prior year.
Halfords enjoyed reasonable growth in the auto centres unit, which was the only element of mild positivity, with group sales down 0.1% during the period.
There is a clear split between discretionary spending and necessary expenses. As Russ Mould explains below, consumers are holding off on purchasing new bikes but will always need to maintain their cars.
“Zero growth from Halfords in its first-half period isn’t as bad as it first looks. The company had tough comparative figures to beat from a year earlier, so the fact the business has managed to stand still rather than go into reverse has to be taken as a win. Indeed, investors have given the performance the thumbs-up, with a small rise in the share price,” said AJ Bell investment director Russ Mould.
“Consumers might not be feeling flush enough to splash out on expensive items like top-end bikes from Halfords, but there are certain things that need sorting out regardless. People who rely on their car to get to work need to spend on motoring essentials to ensure their vehicle is roadworthy. It’s Halfords’ job to ensure it is the company of choice to provide these services and its autocentres arm has shown progress.”
“The weak spot once again was tyres where drivers are opting for budget ranges. At the end of the market, premium products have been awash with promotions across the sector.”
Investors will also see value in the growth of Halfords’ Motoring Loyalty Club, which now has over 4 million members, securing an element of recurring revenue for the group.
Halfords shares were 5% higher at the time of writing.