Halfords Group Plc · LSE:HFD
Halfords — Investor Day (2014)
60 slides from Halfords's investor day presentation, 2014
Slide 1: Site Visit 2014
driving Stop line
Slide 2: Getting Into Gear
Getting Into Gear Kopline ey service the ‘h’ revolution factor stores fit to shop ==. 218tcentury ¢ click with the “+ infrastructure digital future
Slide 3: Presenters and schedule
Emma Fox Commercial Director Rob Swyer Retail Director Andrew Findlay Group Finance Director Questions Lunch Store Tour
Slide 4: Emma Fox, Commercial Director
Emma Fox Commercial Director
Slide 5: My Background
My Background Marketing Private Label Trading CUSTOMER Merchandising Logistics & Store Proposition 5
Slide 6: Formula For Growth: Customer Promises
Formula For Growth: Customer Promises More Customers More Products or More Visits Services in Basket ACHIEVED THROUGH FOUR CUSTOMER PROMISES PRICES YOU QUALITY YOU RANGE YOU SERVICE THAT CAN TRUST CAN TRUST CAN RELY ON WOWS 6
Slide 7: More Cars Starting To Be Driven More
More Cars… …Starting To be Driven More 27.0 Total Car Miles (bn) 27.0 Licenced Cars (m) 27.3 246.9 26.9 26.8 244.1 245.5 26.7 247.3 242.3 244.8 240.6 26.3 26.2 239.8 240.3 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 2013 Car Parc Continues To Age… …And Are More Co
Slide 8: Car Maintenance
Car Maintenance 3Bs: opportunities to sustain growth Exploiting the changes in technology Increasing car-specific consumables 8
Slide 9: Car Maintenance
Car Maintenance Workshop: a focus on quality, the right range and leveraging a more-aggressive promotional strategy Lifetime quality guarantee on Halfords Advanced socket sets Introducing Halfords Essentials: a clear private-label hierarchy 9
Slide 10: Car Enhancement
Car Enhancement DAB: a longer-term play Partnership with suppliers such as Pure important for innovation in Audio Sat Nav will remain challenged 10
Slide 11: Wearable fitness technology is a growing trend
Wearable fitness technology is a growing trend Camping now focused on two key markets: families and festivals Roof storage: single pricing 11
Slide 12: A step change in our premium range
A step change in our premium range New brands and extended ranges this summer Boardman at the heart of our premium range 12
Slide 13: Apollo: the UK's biggest bike brand
Largest relaunch of own-label brands Apollo: the UK’s biggest bike brand Carrera: 2nd-largest bike brand Junior bikes: a step change in the offer 13
Slide 14: PACs at the core of our Cycling strategy
PACs at the core of our Cycling strategy Building further capability Larger ranges extended across our stores 14
Slide 15: Cycle credit: adding value for customers
Cycle credit: adding value for customers A Summer Of Cycling: in- store and online TDF ranges across Boardman, Pendleton and Carrera 15
Slide 16: Online and digital enhancements
Phase 1 of redesign completed: great customer feedback Halfords app relaunched Two further site updates to enhance customers’ experience Tablets in store 16
Slide 17: Community Engagement
Community Engagement Increasing the number of kids’ bike clubs Partnership with the Scouts Association Re~Cycle partnership goes from strength to strength Halfords very much a part of the community 17
Slide 18: Commercial Summary
Commercial Summary Category growth based on a customer-focused strategy Car Maintenance and Cycling opportunities Online Retail: a good start, more to do Community engagement underpinning our specialist credentials 18
Slide 19: Rob Swyer, Retail Director
drivi ng £topline Rob Swyer Retail Director
Slide 20: My Background
My Background Commercial TEAMS Property & Operations Development 20
Slide 21: Getting Into Gear: Giving Clarity To Every Colleague
Getting Into Gear: Giving Clarity To Every Colleague In Every Store • We’re all colleagues: one team • Genuine concern for colleagues • Committed to our local communities Great Place To Work Services That Make Help And Shops To Be Us The Best • Linking the Proud Of omnichannel world Inspire Our • Un
Slide 22: Key Focus: A Great Place To Work
Key Focus: A Great Place To Work RECRUITMENT GEARS Recruit, Retain And Recognise Colleagues 54,835 online applications Embed 3-Gears 36,727 screened Focus On Engagement 3,040 telephone interviews Drive Colleague Development 1,027 offers made 22
Slide 23: Key Focus: Stores To Be Proud Of
Key Focus: Stores To Be Proud Of Strengthening Operational Standards Driving Continuous Improvements In Store Supporting The Refresh Programme 23
Slide 24: Key Focus: WOW Every Customer
Key Focus: WOW Every Customer Customer Is The Most Important Person Solving Customer Issues Based On Passion And Knowledge Colleague Appearance 24
Slide 25: Key Focus: Services That Make Us The Best
Key Focus: Services That Make Us The Best 3Bs Travel Solutions fitting Cycle Repair 25
Slide 26: Stores Fit To Shop
Stores Fit To Shop Deliver Better Standards In Existing Stores Develop The Refresh Concept Execute The Rollout Programme 26
Slide 27: A Framework For Stores To Be Proud Of: Invite Me In
A Framework For Stores To Be Proud Of 1. Invite Me In 27
Slide 28: A Framework For Stores To Be Proud Of: Showcase
A Framework For Stores To Be Proud Of 2. Showcase wefit / Cycle Repair 28
Slide 29: A Framework For Stores To Be Proud Of: Customer Guidance
A Framework For Stores To Be Proud Of 3. Customer Guidance 29
Slide 30: A Framework For Stores To Be Proud Of: Reallocation Of Space
A Framework For Stores To Be Proud Of 4. Reallocation Of Space 30
Slide 31: A Framework For Stores To Be Proud Of: Enliven Customer Journey
A Framework For Stores To Be Proud Of 5. Enliven Customer Journey 31
Slide 32: A Framework For Stores To Be Proud Of: Digital Touch-points
A Framework For Stores To Be Proud Of 6. Relevant Digital Touch-points 32
Slide 33: A Framework For Stores To Be Proud Of: Showcase Colleagues
A Framework For Stores To Be Proud Of 7. Showcase Colleagues 33
Slide 34: A Framework For Stores To Be Proud Of: Communicate Value
A Framework For Stores To Be Proud Of 8. Communicate Value 34
Slide 35: A Framework For Stores To Be Proud Of: Customer Experience
A Framework For Stores To Be Proud Of 9. Considerate Customer Experience 35
Slide 36: A Framework For Stores To Be Proud Of: Category Icons & Stories
A Framework For Stores To Be Proud Of 10. Category Icons & Stories 36
Slide 37: The Transformation At Coventry
The Transformation At Coventry Before Before After 37
Slide 38: The Transformation At York
The Transformation At York Before Before After After 38
Slide 39: The Transformation At Evesham
The Transformation At Evesham Before Before After After 39
Slide 40: Service and Stores: Summary
Service and Stores: Summary Driving Retail Standards In Every Store Embedding A Strong Service Culture Through Colleagues Executing The Refresh Programme Continuing To Develop The Refresh Concepts 40
Slide 41: Andrew Findlay, Group Finance Director
Andrew Findlay Group Finance Director
Slide 42: Key Considerations
A stores fit to shop Key Considerations driving stopline 42
Slide 43: A Background Of Under-investment
A Background Of Under-investment We have to invest in our store network to remain relevant and grow Nine-Year History Of Store Under-Investment ACTIVITY / CAPITAL INVESTMENT Stores Opened / Relocated c.120 stores c.90 stores from flat to L-shaped mezzanines FY05- Most Recent Material Programmes FY08
Slide 44: Good Progress So Far
Good Progress So Far FY14 Refreshed Stores 3 trial stores c.15 additional stores 1 mezzanine-store extension 1 Cycleworld + Invite Me In c.5 right-sizes/relocations in refreshed format 44
Slide 45: Good Progress So Far
Good Progress So Far Rollout Drivers Capability in place ‘Full Fat’, ‘Light’ and ‘Invite Me In’ models established Clear selection criteria Accepted store design format Standardised conversion plan embedded 45
Slide 46: Performance To Date
Performance To Date The three trial stores were completed in July 2013, and have since been measured on a Relative LfL1 basis Coventry: flat store - below par store prior to conversion, ranked in bottom 10%, now ranked in top 20% Evesham: gallery mezzanine - Car Maintenance moved upstairs, Cycling d
Slide 47: Investment Costs
Investment Costs Capital Investment Highest Cost Scenario Per Store Refresh (‘look & feel’ elements) Key costs: joinery, main contractor, c. 85% furniture and store equipment Catch-Up c.15% Key costs can include: flooring, warehouse construction, colleague area, new racking TOTAL c.£190-210K Emulati
Slide 48: Investment Costs
Investment Costs Cost Mitigation Full Fat vs Light Models ‘Cycleworld’ and ‘Invite Me In’ Investment On A Store-by-store Basis A BLEND OF REFRESH MODELS 48
Slide 49: Rollout Programme
Rollout Programme We have a comprehensive store-selection process based on both quantitative and qualitative data Store Property Market Financial (sales, margin, mix of (lease length, format, (demographics/ (NPV + IRR) sales etc.) age, condition etc.) competition) Balanced1 list of stores to refresh
Slide 50: Summary: Financials
Summary: Financials We have to do this Growth is the prime consideration Good progress to date with a robust rollout programme ahead We won’t touch store again for at least five years 50
Slide 51: Matt Davies, Chief Executive
drivi ng stopline Matt Davies Chief Executive
Slide 52: Key Messages From Today
Key Messages From Today New Commercial Thinking Driving Our ‘H’ Factor Colleagues: Central To Delivering Our Service Revolution Good Progress With Stores Fit To Shop: Meeting Expectations Getting Into Gear: Going To Plan, A Great Platform For Growth 52
Slide 53: Site Visit 2014
driving Stop line
Slide 54: Appendices
driving stop line ppendices
Slide 55: Relative LFL Calculation: An Example
Relative LFL Calculation: An Example An illustration of how pre vs. post vs. control like-for-like sales (Relative LFL) have been calculated. Figures used are for illustration purposes only Like-For Like Sales Pre-conversion Post-conversion Change Weeks 1-11 Weeks 18+ A: Trial Stores +2% +7% +5% B:
Slide 56: Halfords Evesham
Halfords Evesham A: Four Pools Retail Park, Four Pools Lane, Evesham, Worcestershire WR11 1DJ 56
Slide 57: Retail Capital Expenditure FY14-FY16
Retail Capital Expenditure FY14-FY16: unchanged expectations (£m circa) Stores (circa) Store Portfolio 50 Store Refreshes 150 IT & Digital 38 Rightsizes and Relocations 23-30 Other 12 Cycle departments all stores TOTAL 100 Colleague Training Facilities 10 57
Slide 58: Retail Portfolio Space
Retail Portfolio Space Average Total Average Average Trading Space, Average Ground Leaseable Mezzanine including Floor Trading Space1 Trading Space Mezzanine Space (sq.ft) (sq.ft) (sq.ft) (sq.ft) 9,355 8,109 6,425 3,069 Notes: 1) Ground floor only, including back of house. 58 All data as at H1 FY14
Slide 59: Contact and Newsflow
Contact and Newsflow For further information, please go to www.halfordscompany.com or contact Craig Marks Head of Investor Relations craig.marks@halfords.co.uk Landline: +44 (0)1527 513 113 Mobile: +44 (0)7712 888 807 Next Newsflow 22 May - Preliminary Results 59
Slide 60: Forward-Looking Statements
Forward-Looking Statements INCLUDED IN THIS PRESENTATION ARE FORWARD- LOOKING MANAGEMENT COMMENTS AND OTHER STATEMENTS THAT REFLECT MANAGEMENT’S CURRENT OUTLOOK FOR FUTURE PERIODS These expectations are based on currently available competitive, financial, and economic data along with our current ope