Halfords Group Plc · LSE:HFD
Halfords — Investor Presentation (July 2021)
24 slides from Halfords's investor presentation, July 2021
Slide 1: Halfords Group Plc Investment Case July 2021
HALFORDS GROUP PLC INVESTMENT CASE JULY 2021
Slide 2: Investment Case summary
2 Investment Case summary Building a Market-leading Value-creating Cash generative Dividend services-focused business opportunities business returns business We are the UK’s largest In the medium-term, Our strategy will see The Group has always We recognise the retailer of motoring and half of our b
Slide 3: Halfords' unique strengths
3 Halfords’ unique strengths Convenient Unique and Unique, services Strong Super-specialist differentiated technology driven proposition omnichannel expertise as a key products and proposition in our delivered in over capabilities differentiator services physical estate 900 locations Wide range of u
Slide 4: Opportunities for Halfords in a post-COVID-19 world
4 Opportunities for Halfords in a post-COVID-19 world Increase in Healthy living Further An ageing UK motoring and and climate consolidation of car parc cycling journeys change our competitor set Continued avoidance Recessionary An increased focus With the financial of public transport will environm
Slide 5: Group overview
5 Group overview Who we are FY21 financial highlights • UK’s leading provider of motoring and cycling products and services £1.3bn +13.9% £96.3m Revenue Revenue growth Profit Before Tax1 • Trusted brand with over 125 years of heritage • Market leading brand awareness in our retail business • Over 20
Slide 6: Market size, share and growth dynamics
6 Market size, share and growth dynamics Retail Motoring Autocentres Cycling Services Product Services Product Services (retail) Market size* £3.5bn Significant** £9.0bn £2.0bn £150m Halfords’ 20-25% High 3% 20-25% 8% market share* Market growth expectations With traditional markets in Halfords is a
Slide 7: FY21 has seen progress in improving cycling profitability and financial returns
7 FY21 has seen progress in improving cycling profitability and financial returns… Autocentres has 3% Product market share in a very fragmented market Services with no market leader Size of bubble Autocentres represents relative size of segment Retail Motoring Services Market Growth Cycling Opportun
Slide 8: Macro, consumer and industry trends are driving the need for change
8 Macro, consumer and industry trends are driving the need for change Macro trends Consumer trends Industry trends • Global economic, political and health crises • DIY to DIFM • Cars and parts lasting longer leading to low levels of consumer confidence and becoming more • Convenience complex • Compl
Slide 9: Our strategy: To inspire and support a lifetime of motoring and cycling
9 Our strategy: To inspire and support a lifetime of motoring and cycling 1 Inspire our customers with a differentiated and super-specialist offer 2 Support our customers through an integrated, unique and more convenient services offer 3 Enable a lifetime of motoring and cycling “Evolve into a consu
Slide 10: Significant opportunity within each area of our strategy
10 Significant opportunity within each area of our strategy • Transition from a general-specialist to a super-specialist. 1 • Lead and differentiate our markets with customer-led innovation. Inspire our customers with a • Redefine and further differentiate our own label ranges. differentiated and su
Slide 11: Inspire our customers with a differentiated and super-specialist shopping offer
Our strategy was adjusted in FY21 in response to the extreme uncertainty caused by 11 COVID-19. We focussed on building strong foundations from which to transform • Centralised customer contact from our 404 retail stores achieving a call answer rate of over 95%, despite a 4x increase in contact duri
Slide 12: Value-creating opportunities
12 Value-creating opportunities To become the UK’s largest Increasing Integrating online, garages, Growth in independent provider of customer retail stores and vans to automotive services, drive customer cross-shop, Services and maintenance and repairs, lifetime retention and higher basket B2B whils
Slide 13: Medium-term operating cost opportunities
13 Medium-term operating cost opportunities Unlocking value Opportunity Further within our across end-to- optimisation property estate end supply chain across the Group • Opportunity to optimise the • Opportunity to operate with • Continued focus on reducing assets within a town: less working capita
Slide 14: Unlocking value within our property estate
14 Unlocking value within our property estate Closing uneconomic locations This year Lower rentals on existing estate We closed ~10% of the Group’s fixed estate during 19 Retail lease agreements completed in FY21 resulting FY21. in an average rent reduction of -30%. We anticipate further reductions,
Slide 15: Retail lease profile gives flexibility for re-modelling our estate
15 Retail lease profile gives flexibility for re-modelling our estate Physical retail estate lease expiry / breaks cumulative number of stores In Retail, we have a flexible lease portfolio, with two-thirds of leases having expiries or breaks in the next 5 years. FY21 FY22 FY23 FY24 FY25 Expiry Break
Slide 16: Financial dynamics of each segment
16 Financial dynamics of each segment Note: These are indicative and relative to the Halfords average Product Services Motoring Cycling Retail Autocentres Medium-term growth Lower Higher Higher Higher prospects Gross Average Lower Higher Higher margin (%) Opex as a % of Lower Higher Average Higher s
Slide 17: Key metrics today vs 5 years time
17 Key metrics today vs 5 years time FY211 In 5 years Sales CAGR +4.8% • By implementing our strategy we will evolve into a services-focused business, with an ambition to double Gross our services revenue to 50% of 50.8% Margin % Group sales. Operating cost % • With a materially larger services 42.9
Slide 18: Capital Allocation Priorities
18 Capital Allocation Priorities 1 Maintaining a prudent balance sheet 2 Investment for growth 3 M&A, focused on Autocentres 4 Progressive dividend policy 5 Surplus cash returned to shareholders
Slide 19: Appendix
19 halfords APPENDIX
Slide 20: Business Segments
20 Business Segments Numbers presented are for FY21
Slide 21: ESG Areas of Priority
21 ESG Areas of Priority Product, Packaging and Electrification Net Zero Commitment Diversity & Inclusion Waste Management Our Ambition: “The leading name in electric “Achieve Net Zero “ Make Halfords a truly “ Minimise our environmental services giving everybody value chain emissions inclusive plac
Slide 22: Super-specialist proposition
22 Super-specialist proposition Developing our ‘Super-Specialist’ Proposition These propositions demonstrate the key areas and customer take-outs that we need to achieve for us to be seen as super-specialists within our market Inspire Support Lifetime Expertly Curated Range Ultimate Accessibility Cu
Slide 23: Executive Team
23 Executive Team Andy Randall Graham Stapleton Loraine Woodhouse Karen Bellairs Group Chief Operating Chief Executive Officer Chief Financial Officer Chief Customer Officer Officer Wendy Taylor David Hutchinson Paul O’Hara Neil Holden Rob Keates Chief People Officer Chief Commercial Chief Property
Slide 24: Contact and Newsflow
24 Contact and Newsflow For further information, please go to www.halfordscompany.com or contact: Andy Lynch Head of Investor Relations and Corporate Finance andrew.lynch@halfords.co.uk