Investor Presentation 1
The History Of Halfords History 1965: 2010: 1984: 1892: Becomes 1989: WWG 2002: 2004: Acquisition Becomes Founded In Part Of Acquired By Acquired By Floated On Of Part Of Birmingham Burmah Boots CVC LSE Nationwide Ward Group Group Autocentres 2
The Investment Case The UK’s leading retailer of automotive and leisure products and leading independent operator in garage servicing and auto repair Strong Cash Generation And A Robust Balance Sheet The Market A Clear Leader In Core Strategy For Categories Growth 3
The Group At A Glance Retail FY11 Retail Sales % • FY11 £770m sales, £124m operating Car profit Maintenance • 467 stores across the UK and ROI Leisure • Truly multi-channel • 89% of FY11 Group sales 31.4 40.2 Autocentres • FY11 £98m sales, £7m operating 28.4 profit • 249 Autocentres across the UK • Bringing scale to the proposition Car Enhancement • 11% of FY11 Group sales All numbers shown are before non-recurring items 4
Retail Strategy A consistent and effective strategy for managing the business Extending range and service advantage Investing in store portfolio Ongoing focus on cost control Leveraging the Halfords brand in multi-channel 5
Car Maintenance • The highest-margin category • Category Strengths: • Needs driven demand • Established brand is natural destination for customers • Huge range and national availability • Leveraged through in-store services • Resilient and needs-based category • Largely fragmented competition 6
Car Enhancement • The lowest-margin category • Service overlay with fitting of Audio and Sat Nav • Opportunities in DAB in medium to long term • Managing for cash • Fitting is a growth opportunity and a USP against the competition 7
Leisure • Margin broadly in line with the Retail average • Cycling twice the size of Travel Solutions • The most compelling growth opportunity • Tight integration with multichannel drives price-led ranges Consistent growth in camping as Halfords becomes known for “life on • the move” Positive underlying trends in cycle market – sustainability, fitness, family, • London 2012 8
The Retail Proposition Compelling Service Dominant Range Offer Value Differentiation • • • Particularly in CM, we fit and we repair Economies of scale vs • CE & Cycling independants Do It For Me – • • Combination of own replacing Do It Yourself Global sourcing label and 3 rd -party brands The Value Proposition Driven By Price, Service and Innovation 9
Value Through Service 3Bs fitting penetration (%) 28.6 Central to Halfords proposition 25.7 21.0 • Expert advice and information • Products lend themselves to added-value services • Competitive strength vs online Q3 FY10 Q3 FY11 Q3 FY12 2011 Growth in revenue 0 • Fitting penetration levels up • Increased levels of attachment Extending range and service advantage 10
Value Through Range • Ranges led by comprehensive private label assortment • Leading brands stocked in key categories • Broad spread of price points • Offices across Asian region source c.40% of sales • Full choice of complimentary accessories Extending range and service advantage 11
Value From The Store Portfolio • Wide UK representation • 53 short-term-payback refreshes completed in H1 • c.140 lease expiries over the next 5 financial years • London stores – exploring the potential Investing in the store portfolio 12
Value Through Cost Control Operating Costs • Strong cost-control culture at Halfords • Procurement disciplines • Benefits of new distribution network being realised • H1 store payroll flat – fitting & services improved Sourcing • New product areas – Cambodia, Vietnam, Tunisia • In-region expertise Ongoing focus on cost control 13
Creating Value Online The Customer Experience • Online penetration over 10% of Retail sales; 33m visitors YTD, up 4% • A true multichannel retailer – 87% store collected • Rebalanced promotional activity Online Development • Mobile optimised site • Shopping app launched • Re-platformed site Leveraging Halfords brand in multi-channel 14
Autocentres The leading Purchased UK provider February 2010 of MOT, car A £74.9m servicing and consideration repairs Dealership Highly-trained quality staff and service at latest more diagnostic affordable equipment prices As Credible As A Franchise Dealer As Cost-Effective As An Independent 15
Autocentres Strategy A consistent and effective strategy for managing the business Maintaining and growing service advantage Maintaining a low-cost structure Investing in new centres Leveraging the Halfords brand 16
Autocentres Opportunities 1% market share of a £9bn market Increasing technological Self-funded centre complexity of cars rollout: >400 favours the scale locations players Increasing brand Opportunities to drive awareness utilisation rates of technicians and ramps Halfords.com is the footfall driver 17
Autocentres Progress • Rebrand completed Q4 FY11 • National media campaign in Q4 FY11 • 26 centres opened since acquisition • Investment in people and brand awareness • Head Office relocation • Gross margin robust LFL growth Q1 +2.1% Q2 +3.1% Q3 +10.9% 18
Summary Good progress in a tough consumer environment Strong Cash Generation And A Robust Balance Sheet The Market A Clear Leader In Core Strategy For Categories Growth 19
Investor Presentation 20
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