Slide 1: Preliminary Results
Preliminary Results 53 Weeks to 3 April 2009 City Presentation Centre 10 June 2009
Slide 2: Nick Wharton, Finance Director
Nick Wharton Finance Director
Slide 3: 52-Week Financial Highlights
52-Week Financial Highlights1 Solid earnings progression in challenging trading environment z Sales £794.7m -0.3% z Like-for-like sales -3.3% (Easter adjusted -3.0%) z Gross margin increased by 160bps z Profit before tax and exceptional items £92.4m +2.4% z Basic EPS 31.8 pence +8.5% z Operating cas
Slide 4: Income Statement
Income Statement Excluding exceptional items FY09 FY09 FY08 52 week 53 week 52 week 52 week Growth £m £m £m % Revenue 809.5 794.7 797.4 -0.3% Gross profit 421.4 413.7 402.5 +2.8% Net operating expenses (317.4) (311.8) (301.5) +3.4% Operating profit 104.0 101.9 101.0 +0.9% Operating profit % 12.8% 12
Slide 5: Revenue Growth
Revenue Growth Strong sales growth continues in core heritage categories. FY09 FY08 52 weeks 52 weeks % % Underlying 52-week LFL sales growth -3.3 +3.3 Currency1 +0.6 - Easter contribution +0.3 +1.0 52-week same-store sales growth -2.4 +4.3 Net new space +2.1 +2.9 52-week sales growth -0.3 +7.2 53rd
Slide 6: Revenue / Gross Margin
Revenue / Gross Margin Resilient sales performance, mix and trading strategies benefit margin FY09 FY08 FY09 FY08 LFL1 LFL1 GP GP % % % % Quarter1 -1.1 +7.2 Quarter2 -1.1 +3.2 Half 1 -1.1 +5.5 +51.6 +50.9 Quarter3 -7.8 +0.7 Quarter4 -3.8 +4.5 Half 2 -5.4 +2.5 +52.6 +50.1 52-Week -3.3 +4.0 +52.1 +50.
Slide 7: Core UK Business Performance
Core UK Business Performance Cost and margin management drives 75bps strengthening in underlying UK1 operating margins FY09 FY08 52 weeks 52 weeks % Revenue % Revenue 52-week operating margin: 12.82 12.67 Landlord contributions (0.34) (0.56) Central European start-up costs 0.39 0.28 Property related
Slide 8: Net Operating Costs
Net Operating Costs Cost & productivity focus offsets revenue & inflationary pressures. £m % Revenue z Core payroll productivity FY08 operating costs 301.5 37.8% improvement FY09 non comparables:1 5.2 z Rent inflation moderating Space increase 6.2 z Focused advertising Restructure benefits (0.5) inv
Slide 9: Operating Cost Efficiency
Operating Cost Efficiency Half 2 cost interventions generate significant cost improvements FY09 FY10 FY11 FY12 Payback £m £m £m £m Yrs (Costs)/Benefits: Headcount1 (2.8) 4.0 4.0 4.0 0.7 Distribution Centre (8.3) - 2.0 4.0 3.5 Bikehut (1.2) 0.2 0.2 0.2 - Operational (12.3) 4.2 6.2 8.2 2.3 Financial:
Slide 10: Balance Sheet
Balance Sheet Balance sheet management remains a clear focus 53 week 52 week FY09 FY09 FY08 YOY Growth £m £m £m £m % Goodwill and intangible assets 259.5 259.6 256.8 +2.8 +1.1% Property, plant and equipment 107.5 107.9 116.2 -8.3 -7.1% Derivative financial instruments1 13.3 13.3 1.6 +11.7 - Net work
Slide 11: Capital Expenditure Summary
Capital Expenditure Summary Capital investment centred on high returns FY09 FY08 £m £m New stores and re-sites 7.0 12.1 Store refurbishment 2.5 1.8 Central Europe (incl. Systems development) 2.0 1.5 Total portfolio 11.5 15.4 Head office systems (incl. Multi channel) 5.0 5.5 Store systems 0.8 6.3 Sup
Slide 12: Cash Flow and Net Debt
Cash Flow and Net Debt Operating cash flow Free cash flow Net debt3 £m £m £m Operating profit1 91.7 Op. cash flow 114.2 Net debt 28.03.08 (181.7) Depreciation/Amortisation 25.1 Net finance costs2 (14.9) Free cash flow 39.1 Employee share scheme 1.7 Taxation (25.5) Share buy back (13.1) Fixed asset w
Slide 13: Balance Sheet Flexibility
Balance Sheet Flexibility Debt : Structure & Profile z £180m term loan, repayment July 2011 z £120m revolving credit facility FY09 FY08 Key Debt Metrics: Target times times z Adjusted net debt1/EBITDAR1 >3.9x 3.84 3.90 z Fixed charge cover2 2.25 – 2.30x 2.36 2.34 z Net debt/EBITDA - 1.3 1.5 Share Bu
Slide 14: David Wild, Chief Executive Officer
David Wild Chief Executive Officer
Slide 15: Agenda
Agenda z Overview z Strategic Growth Plan z Outlook z Summary 15 Halfords Group plc Preliminary Results – 10 June 2009
Slide 16: Overview
Overview Results demonstrate Halfords’ strength in tough trading environment z Car Maintenance and Cycling underpin sales resilience z Active trading strategies increase margins z Margin leverage through market leadership positions and agile sourcing z Growing wefit services provide clear differenti
Slide 17: Strategic Growth Plan
Strategic Growth Plan Core UK business provides continued growth opportunities. z Extending range and service advantage z Investing in the Store Portfolio z Ongoing focus on cost control z Leveraging the Halfords brand in multi-channel 17 Halfords Group plc Preliminary Results – 10 June 2009
Slide 18: Extending Range & Service Advantage
Extending Range & Service Advantage Unique offer and differentiated service proposition z Natural destination for Automotive & Leisure products z Core categories provide growth opportunities z Broad competitive set with Halfords delivering market leading package z Consolidation opportunity in fragme
Slide 19: Extending Range & Service Advantage
Extending Range & Service Advantage Market leadership in growth categories z Car Maintenance Ageing UK car parc positive for demand Car specific ranging, high availability and product innovation Trade Card growth encouraging z Cycles Growth driven by economy, health & sustainability Brand
Slide 20: Extending Range & Service Advantage
Extending Range & Service Advantage Market share opportunities exist in large categories z Premium Bikes Growth fuelled by Cycle2Work Low relative market share Boardman exclusive deal strengthens credentials z Children’s Bikes Share below category average Extended licensed brand offer z Ca
Slide 21: Extending Range & Service Advantage
Extending Range & Service Advantage Service differentiation enriches margin and customer loyalty Fitting proposition intrinsic to all categories Bulbs, Blades and Batteries Child seats FY09 Car Maintenance Fitting Penetration 30 “Set up and demo” 25 20 % 15 Cycle Repair & Bike Care Plan 10 5
Slide 22: Extending Range & Service Advantage
Extending Range & Service Advantage Service differentiation enriches margin and customer loyalty Active trading benefiting all categories, with strong trajectory 45% penetration in cycle accessory attachment 60% growth in Sat Nav attachment 80% growth in Bike Care Plan Sat Nav Attachment Rates
Slide 23: Extending Range & Service Advantage
Extending Range & Service Advantage Private label and range architecture key to active trading Halfords Value Halfords Halfords Advanced 23 Halfords Group plc Preliminary Results – 10 June 2009
Slide 24: Extending Range & Service Advantage
Extending Range & Service Advantage Focused marketing delivers high investment returns z Enhanced communications strategy z Up-weighted TV/Full Colour Flyer promotions z Targeted advertising generates high return z Sponsorship builds brand awareness Sponsorship of “Dave” Sponsorship of British Olymp
Slide 25: Investing in the Store Portfolio: United Kingdom
Investing in the Store Portfolio United Kingdom 60 new sites targeted in identified catchments 9 new Halfords stores opened in FY09 Plan to open 10-15 new stores in FY10 Superstores z 375 stores trading, 226 with mezzanine z 26 stores refurbished to maintain contemporary feel z 100 stores suitable f
Slide 26: Investing in the Store Portfolio: Republic of Ireland
Investing in the Store Portfolio Republic of Ireland Background z 20 superstores and 2 compacts now trading four years after market entry z Market leadership achieved in all core categories. z Current performance reflects tough economic environment Current Actions 50.0% 40.0% 30.0% z “Reserve and Co
Slide 27: Investing in the Store Portfolio: Central Europe
Investing in the Store Portfolio Central Europe Poland & Czech Republic target markets, remain attractive, providing long-term scale potential Market Potential Czech UK Republic Poland z Significant population Key EconomicStatistics z EU membership underpins GDP growth Population (millions) 61 10 40
Slide 28: Investing in the Store Portfolio: Central Europe
Investing in the Store Portfolio Central Europe Sales Background z Czech Republic LFL sales progression Summer 2008 : +22% Autumn/Winter 2008 : –16% Spring 2009 : –2% z Strong start in Poland Earnings Performance z FY09 losses £3.2m (FY08: £2.2m) z Losses expected to be similar in FY10 Develop
Slide 29: Investing in the Store Portfolio: Central Europe
Investing in the Store Portfolio Central Europe Poland & Czech Republic remain attractive, providing long-term scale potential Leverage core strengths z Far East sourcing significant competitive advantage z UK relationships with global brands z Positive own brand acceptance z Scaleable systems archi
Slide 30: Ongoing Cost Control
Ongoing Cost Control Continued focus ensures appropriate and flexible cost base z Cost of Goods: Strong Far East buying capability Source cost reductions partially offset dollar impact Active re-sourcing via new Shanghai office z Store Payroll: Rota optimisation continues to deliver efficien
Slide 31: On-going Cost Control
On-going Cost Control Logistics reconfiguration provides significant opportunity Current Configuration Future Configuration Optimum Redditch location Redditch based on store footprint Coventry Redditch Cowley z Redditch1 240k sq ft z Redditch 240k sq ft z Redditch 2 140k sq ft z Coventry NDC 320k sq
Slide 32: On-going Cost Control
On-going Cost Control z Current 3 Distribution Centre infrastructure sub-optimal: Location Physical constraints z Migration across 2009/10 to optimal configuration: New NDC located at centre of gravity Dedicated cycle warehouse using existing infrastructure Appropriate investment in automa
Slide 33: Leveraging the Halfords brand in multi-channel
Leveraging the Halfords brand in multi-channel halfords.com provides significant future upside z Slow start z Direct fulfilment model z Technology biased z Price competitive with pure play z Relatively low return on investment 33 Halfords Group plc Preliminary Results – 10 June 2009
Slide 34: Leveraging the Halfords brand in multi-channel
Leveraging the Halfords brand in multi-channel halfords.com provides significant future upside Present z Store centric z “Reserve & Collect” z Rapid growth z Widening assortments Future z “Order & Collect” coming z Accelerated assortment extensions z Extend leadership position in key categories z Cu
Slide 35: Leveraging the Halfords brand in multi-channel
Leveraging the Halfords brand in multi-channel halfords.com provides significant future upside Present Direct & R&C Sales Penetration FY08 - FY09 12% z Store centric 10% 8% z “Reserve & Collect” 6% 4% z Rapid growth 2% z Widening assortments 0% Future Website Visitor Numbers and Conversion Rates FY0
Slide 36: Outlook
Outlook FY10: z Sales environment will remain challenging z Good weather, high stock availability and impactful promotional activity has driven a solid early trading performance z Margin management and sales mix supports margin accretion z Cost focus and delivery of restructuring benefits are key pr
Slide 37: Summary
Summary z Solid earnings progression in tough trading environment z Progressive dividend maintained z Focus on protecting performance through economic uncertainty z UK core category and store portfolio expansion opportunities remain z Multi-channel growth encouraging from small base – significant fu
Slide 38: Appendices
Appendices 1. FY09 53rd week analysis 2. Portfolio by Store Type 3. Portfolio by Location
Slide 39: FY09 53rd week analysis
FY09 53rd week analysis FY09 FY09 FY09 FY08 53 weeks 53 weeks 52 weeks 52 weeks Reported Excl Exceptional Excl Exceptional Reported Revenue £809.5m £809.5m £794.7m £797.4m Like-for-like -3.3% -3.3% -3.3% +4.3% Sales Operating Profit £91.7m £104.0m £101.9m £101.0m Operating Margin 11.3% 12.8% 12.8% 1
Slide 40: Portfolio By Store Type
Portfolio By Store Type Retail Space 3,879,822 ft2 Mezzanine Flat Compact Metro Bikehut Total SM/M F C Me BH Opening Number 231 159 24 31 5 450 New Store 5 6 5 0 3 19 Relocations 1 (1) 0 0 0 0 Closures 0 0 0 (3) 0 (3) Conversions 2 (2) 0 0 0 0 Closing Number 239 162 29 28 8 466 08/09 store rollout Q
Slide 41: Portfolio by Type and Location
Portfolio by Type and Location UK RoI Poland CZ Total Superstore 375 20 1 5 401 Mezzanine 226 12 0 1 239 Flat 149 8 1 4 162 Neighbourhood 27 2 0 0 29 Metro 28 0 0 0 28 Bikehut 8 0 0 0 8 Total 438 22 1 5 466 UK RoI Poland CZ Total Opening Number 429 18 0 3 450 New stores 12 4 1 2 19 Closed stores (3)