Halfords Group PLC: Current trading and COVID-19 update (1006019)
March 25 2020 - 2:00AM
UK Regulatory
Halfords Group PLC (HFD)
Halfords Group PLC: Current trading and COVID-19 update
25-March-2020 / 07:00 GMT/BST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
25 March 2020
Halfords Group plc
("Halfords" or "The Group")
Current trading and COVID-19 update
Halfords is providing an update today on the impact of the COVID-19 pandemic
on its business, along with the measures it is taking to actively manage the
risks to its customers and colleagues. Each day we are learning more about
the effects of the pandemic as well as evolving government interventions. We
are modelling a range of scenarios to understand the potential impact on
sales, profit and cashflow and to support decisions on mitigating actions.
Whilst we are confident that the post-pandemic future of the business
remains strong, trading in the near term is likely to be severely impacted.
Supporting our customers and colleagues
The health and safety of our customers and colleagues remains our top
priority and we are committed to supporting them and our wider communities
at such a difficult time. As the UK's largest independent provider of
motoring and cycling services, we have an essential role to play in keeping
the UK moving. Each month, we carry out more than a quarter of a million
motoring jobs in our retail stores, over 100,000 jobs in our garages and
approximately 12,500 motoring jobs at people's homes or workplaces using our
fleet of mobile vans. Every month we see over 50,000 vehicles with serious
safety defects and a further 100,000 vehicles with issues requiring
attention. Many key workers rely on us to keep their motor fleet running,
including the Ministry of Defence, the British Transport Police and several
large UK utility companies. Alongside this, we carry out over 200,000 bike
builds, services and repairs every month and over 40% of the Government
backed Cycle2Work scheme in the UK is delivered through our Retail business.
Halfords is uniquely positioned to keep the UK's cars and bikes on the road
and safe to drive or ride, providing vital support to emergency workers,
fleet operations, key workers and the general population as they travel for
essential supplies and, where required, attend places of work.
We are committed to playing our part, but only if we can ensure the health
and safety of our colleagues and customers, and we are able to comply with
government policy. We have been designated by the Government as a provider
of essential services and so we have the legal flexibility to remain open
across the entire business. As it currently stands, our Autocentres garages
and Mobile vans are open and, within Retail, we are working through a plan
to provide partial store coverage from later this week. We will continue to
take orders online on both Halfords.com and Tredz.co.uk, offering either a
home delivery service or Click and Collect once branches are reopened.
Current trading
Recent trading has been in line with expectations, and, in fact, very strong
in the last couple of weeks, but delivery of the FY20 profit outturn is
dependent on sales performance in the final two weeks of the financial year.
Post the Government's latest announcement on measures to protect the public,
we are working through our operational plans. We are seeking to strike a
balance between providing essential motoring and cycling services to the UK
public alongside guaranteeing the personal safety of our customers and
colleagues. Given the latest Government guidance we believe there is a high
likelihood that sales will drop sharply and, if so, that the shortfall will
have an impact on profitability, such that FY20 underlying profit before
tax, on a 52-week and pre-IFRS16 basis, could be at the lower end of, or
slightly below, the current guidance range of GBP50-55m.
At this early stage in the pandemic, it is not possible to provide
meaningful guidance on earnings in FY21. Our focus now is on taking every
step necessary to secure future value for colleagues and shareholders.
Financing
The Group has access to substantial liquidity through a GBP180m revolving
credit facility (RCF) and a GBP20m overdraft facility, provided by a syndicate
of major banks, expiring in September 2022. We have drawn down on the RCF in
full and now have approximately GBP118m of cash on deposit. Total liquidity is
therefore GBP138m, including the overdraft facility. The Group continues to
expect that it will satisfy its covenant requirements at the FY20 year-end.
We are in active dialogue with our existing lending syndicate to provide
additional flexibility to support Halfords through this period of
uncertainty.
Outlook and mitigating actions
Despite an improvement in recent sales performance, we expect that volumes
could now see a material reduction. We have modelled a range of disruption
scenarios, with our median scenario assuming significant sales declines for
the three-month period from April to June, followed by weakness for the
remaining nine months. Over the course of the full year, this would result
in a sales decline of 25% (c. GBP300m) with the most material impact being
seen in the first quarter of the new financial year.
In response, the Board is taking a series of immediate measures to preserve
cash, including, but not limited to:
· Suspension of the dividend, resulting in a cash saving of approximately
GBP24m in FY21.
· As announced by the UK Government, business rate relief for the whole of
FY21. This currently applies to the retail estate only, saving
approximately GBP26m per year.
· Negotiations with landlords regarding rent relief, including an
immediate switch to monthly payments from quarterly.
· Where stores and garages are closed, we will access Government support
on salary payments.
· Reduced purchases of goods not for resale (GNFR), including lower
marketing spend.
· Postponing capital commitments: Our capital spend for FY21 will be well
below current guidance of GBP40-60m. We are currently planning for capital
spend in FY21 to be in the range of GBP10-15m, but this will remain under
review as the situation evolves.
· Optimising working capital, including changes to the timing and amount
of stock purchases.
· Deferral of VAT payments to March 2021.
Based on the median sales scenario, and the measures we have outlined above,
we are confident that we can operate within our existing debt facilities
throughout FY21.
Given the rapidly changing situation, there is no certainty on the severity
or duration of the impact on the business and so we are not providing formal
profit guidance for FY21 at this time. The Group will continue to consider
its funding options on an ongoing basis.
Halfords is a resilient business with a healthy balance sheet, substantial
liquidity and strong cash flow. The Group has a core role to play in
providing essential motoring and cycling services to the nation, at this
critical time but also more generally. We have an experienced management
team and the capability to adapt and respond quickly to changing market
conditions. The Board remains confident in the strategy over the longer term
and believes the Group will be well positioned to benefit from the
normalisation in trade.
We will update the market as events evolve.
Graham Stapleton, CEO said:
"In such difficult times the health and safety of our colleagues and
customers remains our top priority and we continue to take all appropriate
action in line with government advice. Halfords has an essential role to
play in keeping the country moving, providing vital support to emergency
workers, fleet operations, key workers and the general population as they
travel for essential supplies and, where required, attend places of work.
While significant uncertainty exists on the impact of COVID-19, we are
taking immediate and significant measures to contain our costs and protect
our financial position. We have a strong balance sheet, with significant
liquidity headroom and low levels of financial debt.
This is an unprecedented challenge for all of us, but I am confident that
the actions we are taking to successfully navigate the current situation
will put the business in a position of strength, enabling us, over the
medium term, to refocus on our strategic transformation.
Finally, I would like to thank all our fantastic colleagues and customers
for their incredible support during this challenging period."
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Neil Ferris, Corporate Finance Director +44 (0) 7483 360675
Media (Powerscourt) +44 (0) 20 7250 1446
Rob Greening halfords@powerscourt-group.com
Lisa Kavanagh
Notes to Editors
www.halfords.com www.halfordscompany.com [1] www.halfordsautocentres.com [2]
www.cyclerepublic.com [3] www.boardmanbikes.com [4] www.tredz.co.uk [5]
Halfords is the UK's leading provider of motoring and cycling services and
products. Customers shop at 446 Halfords stores, 26 Performance Cycling
stores (trading as Cycle Republic, Tredz, Boardman and Giant), 369 garages
(trading as Halfords Autocentres) and have access to 75 mobile service vans
(trading as Halfords Mobile Expert). Customers can also shop at
halfords.com, cyclerepublic.com and tredz.co.uk for pick up at their local
store or direct home delivery, as well as booking garage services online at
halfordsautocentres.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.
ISIN: GB00B012TP20
Category Code: UPD
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 54402
EQS News ID: 1006019
End of Announcement EQS News Service
1: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=dc934a09a1192ec0a1dd5bc4c5b4e7f2&application_id=1006019&site_id=vwd&application_name=news
2: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=34c067327218f9fdaa7059abab2d3178&application_id=1006019&site_id=vwd&application_name=news
3: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=d32c1437e04b39b974679c41f3533039&application_id=1006019&site_id=vwd&application_name=news
4: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=a4639b0dc1388a3a55b92a77548868bb&application_id=1006019&site_id=vwd&application_name=news
5: https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=8d9c0d9b41eb2335e0a4ce386dba87e7&application_id=1006019&site_id=vwd&application_name=news
(END) Dow Jones Newswires
March 25, 2020 03:00 ET (07:00 GMT)
Halfords (LSE:HFD)
Historical Stock Chart
From Apr 2024 to May 2024
Halfords (LSE:HFD)
Historical Stock Chart
From May 2023 to May 2024