Halfords (lon:hfd)
Halfords - Oversold As They Are In The Retail Business?


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Title: Halfords - Oversold As They Are In The Retail Business?
Company: HFD - Halfords
Share Price Then: 218p
Author: Ian Smith
Date: Fri 11 Jan 2019
Comments: A trading update saw 20% knocked of Halfords value, so is this a buying opportunity, especially as the shares were already pretty close to a 5 year low.

I suspect that we are seeing the logic of Halfords are in the retail sector and the retail sector is doing badly so Halfords must be doing badly as well. It may be worth noting that whilst the last 14 weeks figures showed a small decline the last 40 weeks did not.

Unlike Debenhams, House of Fraser etc a lot of what Halfords sell isn’t well suited to buying on line; If you need oil, antifreeze or new wiper blades you probably need it now not within a few days and carriage on items such as oil can be quite high.

With a mild winter so far winter related consumables sales were down, screen wash, de-icer, ice scrapers are all nice profitable items.

It is very similar for children’s bikes, it’s a sunny day so let’s go to Halfords and buy 4 bikes, two for the parents and two for the children, this need isn’t filled well by mail order. Halfords also seem to have found the sweet spot with their Apollo range, cheap but no so cheap as to be un rideable, something that supermarket can struggle with.

Halfords did highlight a drop in sales of higher quality, higher price adult bikes, this may just be a bad year or it may be that the influence of Olympic/Tour de France cycling success has worn off.

The Carrera and Boardman ranges are well regarded amongst keen cyclists even amongst those who suggest that Halfords staff could sometimes benefit from more experience or time.

If you compare Carrera/Boardman to the offerings in the local specialist bike shop the Halfords ranges seem to offer a lot more bike for the same money, along with a less equipment snobby staff, “you don’t want to spend a £1,000 on a bike, that’s bottom of the range, get out of my shop!”

The repair centres were showing a small growth, again this is a sector that online will struggle against, maybe online can bring a mobile mechanic to your car but the Halfords centre will have access to the Halfords parts system.

We also see that plenty of customers are happy to order on line and collect in store, getting stock from a central warehouse to stores is something that Halfords know how to do and allows stores to have an almost unlimited range for items that we could do with this week rather than must have today.
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