Slide 1: Halfords Group Plc Investor Presentation
HALFORDS GROUP PLC Investor Presentation National Distribution Centre Coventry 7 October 2010 1
Slide 2: Agenda
Agenda z Group Strategic Vision David Wild z Pre-Close Trading Statement David Wild/Nick Wharton z Questions and Answers David Wild/Nick Wharton z Warehouse and Distribution Strategy Andy Torrance z Tour of the National Distribution Centre 2
Slide 3: Group Strategic Vision
Group Strategic Vision Halfords Group generates long-term sustainable growth z Grow retail operating profit at 8% CAGR extending market leadership z Develop multi-channel sales and improve net margin z Expand Halfords brand in UK automotive aftermarket z Leverage retail capabilities in other similar
Slide 4: Pre-Close Trading Statement Background
Pre-Close Trading Statement Background “Cautious regarding economic backdrop in 20101” z Challenging comparatives z Tough consumer environment z Distribution centre re-configuration z Store rostering programme z Far East supply z Spring/Summer promotion Cost initiatives developed to mitigate challen
Slide 5: Halfords Retail Context
Halfords Retail Context Broad offer and market position provides revenue protection H1 H1 Full Year LFL Growth % FY11 FY10 FY10 Total Retail -4.5 +1.7 +1.3 Car Maintenance +0.6 +5.1 +8.1 Satellite Navigation -16.4 -25.6 -24.8 Camping +6.4 +5.9 +7.7 Cycling -1.4 +20.2 +15.1 5
Slide 6: Pre-Close Category Overview
Pre-Close Category Overview Car Maintenance H1 H1 Full Year z Attractive market – needs driven LFL Growth % FY11 FY10 FY10 z 30% wefit growth Car Maintenance +0.6 +5.1 +8.1 z Most profitable category Camping +6.4 +5.9 +7.7 z Tools availability impacted by supply Satellite Navigation -16.4 -25.6 -24.
Slide 7: Pre-Close Category Overview: Cycling
Pre-Close Category Overview Cycling z Long-term market growth Health Economy Sustainability z Trading challenges: H1 H1 Full Year LFL Growth % FY11 FY10 FY10 Apollo relaunch Cycling -1.4 +20.2 +15.1 Price competitiveness Town & Trail growth at the expense of Mountain Bikes Accessory av
Slide 8: Multi-Channel
Multi-Channel Dot com represents fast growing profitable channel Strategic Opportunity z Accesses “web only” customers z Drives footfall to stores through Reserve & Collect z Shop window for customer research z Own brand model protects profitability z Cost effective marketing medium FY11 Progress z
Slide 9: Second Half Trading Stance
Second Half Trading Stance Stronger trading stance in response to tougher market conditions z Impactful tactical activity and promotional overlays z Strengthening of peak trading base plan z Supplier investment to strengthen deals z Up-weighted marketing z Enhanced web activity z Stock investment ba
Slide 10: Nick Wharton, Finance Director
Nick Wharton Finance Director 10
Slide 11: Operating Costs
Operating Costs Costs and productivity focus offsets revenue and inflationary pressures Store Labour Key H1 Operating Cost YOY Movement Space z £4m1 pa reduction from optimised rotas W&D Central Europe z Service metric progress continues Operating Cost Property Costs z More flexible cost base establ
Slide 12: Balance Sheet Management
Balance Sheet Management Ongoing Commitment to Balance Sheet efficiency Capital Expenditure z Disciplined investment centred on high returns z Group has low capex requirement Working Capital z Group generates small working capital inflows z H1 stock investment to secure peak inventory Debt/Re-financ
Slide 13: David Wild, Chief Executive Officer
David Wild Chief Executive Officer 13
Slide 14: Halfords Autocentres
Halfords Autocentres Autocentres gaining share in challenging market Revenue z Growing fleet business New customers Increased penetration z Growing customer share z Customer ATV decline Operating margins z Gross margins pressured by: -ve Enhanced tyre participation -ve Trading down +ve Group sou
Slide 15: Halfords Autocentres
Halfords Autocentres Three-year development plan on track z New centres Strong pipeline established 6 centres opened to date 10-15 centres in FY11 Confidence high for 25-30 openings in FY12 z Re-branding Cost effective re-branding model established Customer service road tested 28 centr
Slide 16: Group Financial Guidance
Group Financial Guidance Group on track to deliver earnings growth z Balance of year prudently predicated on -3% like-for-like z Broadly flat retail gross margin for the year z Sustainable cost reductions in place z H1 PBT £67m - £69m, representing 12% YOY growth at the mid-point z Revenues uncertai
Slide 17: Summary
Summary z Tough consumer environment: negative LFL sales z Sales disruption from cost saving initiatives z Halfords Retail More compelling marketing/promotion programme in H2 Continued focus on cost savings z Autocentres Fleet and customer share gains in challenging market 3-year development
Slide 18: Questions and Answers
Questions and Answers David Wild Nick Wharton 18
Slide 19: Distribution Centre
Distribution Centre Andy Torrance Store Operations & Logistics Director 19
Slide 20: Distribution Reconfiguration Overview
Distribution Reconfiguration Overview z Historic 3 DC infrastructure sub-optimal: Location Physical constraints z Migration to optimal configuration: Coventry NDC located at centre of gravity Dedicated cycle warehouse at Redditch site Investment in proven automation z Programme to manage r
Slide 21: Distribution Reconfiguration Overview
Distribution Reconfiguration Overview Old Configuration New Configuration Optimum location Redditch Redditch based on store footprint Redditch Coventry Cowley z Redditch1 240k sq ft z Redditch 240k sq ft z Redditch 2 140k sq ft z Coventry NDC 320k sq ft z Cowley 300k sq ft z Redditch to Coventry 32
Slide 22: Distribution Centre
Distribution Centre Logistics reconfiguration delivers significant savings z Operating cost improvement, £4m pa from: Reduced space costs Rebased pay rates and working practices Optimal centre of gravity saves 2m road kms Productivity gains through proven technology Increased fleet efficie
Slide 23: Distribution Centre Transition Experience
Distribution Centre Transition Experience z Challenges anticipated with mitigating actions z Significant short-term small parts disruption Data take-on Pick by voice stability Operator learning curve z c.3% Revenue disruption over 6-week period z Limited brand impact Current Position z Store a
Slide 24: Questions and Answers
Questions and Answers Andy Torrance 24
Slide 25: Distribution Centre Tour
Distribution Centre Tour A B C David Wild Nick Wharton Andy Torrance Mark Shirley Lee Tevlin Tony Newbould Gillian Hilditch David Jeary Ben Spruntulis Ed Wright Paul Rossington Andy Wade Jamie Bajwa John Stevenson Nick Bubb Isabel Green Charlie Muir-Sands Sanjay Viryathi Andrew Mobbs Assad Malic Ram
Slide 26: Appendix
Appendix Pre-Close Trading Statement 26