Business Review

David Wild
Chief Executive 

Nick Wharton
Finance Director 

Halfords achieved earnings growth despite the challenging trading conditions throughout the consumer sector. This performance reflects the strength of the Halfords brand, which is long established with attributes that resonate strongly, namely, quality, reliability and trust, and the combination of value and quality that we deliver to customers across all of our categories.

The retail sector was severely impacted during 2008, with a number of established, household brand names disappearing from the High Street. Halfords has not escaped the global recession and has itself experienced a year-on-year decline in revenues for the first time in over 20 years. Through proactive and decisive management throughout the business, however, the Group has delivered year-on-year underlying operating profit growth, particularly in its core UK operations, and has demonstrated that the Halfords business is adaptable, successful and resilient throughout the economic cycle.

The Group’s success reflects its status as the natural destination for the automotive and leisure products and services that it offers. Over time, Halfords has consolidated product ranges from disparate markets to give a unique blend of categories in each of which we hold a leading position. These vary between the low average transaction values, needs-driven resilient core car maintenance area to the resurgent cycling market. In all of these we offer a great selection, with exciting seasonally relevant sales promotions backed by excellent in-store customer service and fitting where appropriate. This offer provides both counter cyclical protection and all year round revenue.

The business clearly benefits from scale, offering unrivalled breadth and depth of product range, with a national portfolio of superstores that provides a natural barrier to entry. The Group constantly seeks to enhance its position as store of first choice in each of the markets that it serves. This is achieved through constant product innovation and a market leading service proposition that, through the training and development of knowledgeable store colleagues, ensures a fitting capability at a lower cost to our customers than that provided elsewhere.

Successful businesses must adapt to a changing environment. Early recognition by management of the position in the current economic cycle led to the Group developing a clear near term plan to adapt, as part of a strategy to deliver sustainable earnings growth and value creation. This plan does not represent a rethink of the Group’s strategic plan, rather a focus and emphasis in areas that will underpin Halfords’ resilience now and enhance its growth prospects and earnings in the future.

The four elements of the Group’s strategy are:

• Extending range and service advantage
• Investing in the store portfolio
• Ongoing focus on cost control
• Leveraging the Halfords brand in multi-channel