Halfords Aims to Add 200 Nationwide Branches, Double EBIT
With 224 branches already and another 200 on the way following Halfords’ acquisition of the business, Nationwide Autocentres is on the brink of truly becoming a nationwide operation. And while the company’s core business is MOT and servicing rather than just tyres, the scale of the new business alone is likely to have some degree of impact on national tyre sales.
Nationwide currently reports that it serves 500,000 customers each year. These are a mixture of fleet (25 per cent of revenues) and private (75 per cent). The company’s strategy is to differentiate itself within its market by being the only national operator to provide dealership quality service at lower prices. And this customer proposition is supported by a strong website. With companies like Kwik-Fit increasingly offering a wider range of services and companies like Nationwide increasing their interest in tyres, the gap between the traditional tyre specialist and autocentre is narrowing.
Nationwide’s current management team is led by Duncan Wilkes (chief executive) and Bill Duffy (chief operating officer). In the period since the company’s acquisition by Phoenix Equity Nominees Ltd in February 2006, revenue has increased from £76.5 million to an estimated £97 million and EBITDA from £5.8 million to an anticipated £10.1 million. In the year to 31 December 2008 Nationwide generated profit before tax of £7.5 million and had year end gross assets of £47 million.
Halfords Autocentre business will double EBIT to around £20 million in its third year of ownership
Looking forward, the management have already identified 200 additional sites and Halfords’ plans to open centres at an average of 25 per annum and £135,000 per centre. New centres are expected to reach EBITDA profitability within the second year of operation and achieve a four year pre-tax payback. According to the new owners, the re-branded Halfords Autocentre business will double EBIT to around £20 million in its third year of ownership and is expected to increase earnings per share by circa 6 per cent in its first full financial year within the Halfords Group.
Halfords chief executive, David Wild, said the £9 billion car servicing and repair market is a large and highly attractive sector in which there are increasing demands from motorists. However, this is not Halford’s first venture into the servicing and repair market. While both companies’ official statements played down the company’s history in this sector, Halfords’ last foray in this direction is worth remembering.
Fleet will remain ‘a core focus’
With fleet sales accounting for roughly a quarter of the company’s turnover, Duncan Wilkes, chief executive officer at Nationwide Autocentre commented that this will remain a significant part of Nationwide/Halfords’ business moving forward: “Fleet is, and will remain, a core focus for the business and is central to our growth plans. Halfords has the vision and financial ability to invest in our service and product, and this will very quickly see significant investments in equipment and training, new centres and our people. Today’s announcement is good news both for our employees and customers.”