Halfords Group Plc has reported preliminary full year 2010 results (April to April) showing sales of £831.6 million, up 4.6 per cent on 2009 and up 0.7 per cent like-for-like. The company’s gross margin grew to 54.4 per cent, while operating profit shot up 17.5 per cent to £119.7 million, representing 14.4 per cent of sales (2009: 12.8%).
The acquisition and “successful integration of Nationwide Autocentres” – four of the network’s branches are already said to have converted their livery – were clearly important parts of the company’s strong results. David Wild, Chief Executive, commented: “Halfords has had an excellent year…Sales growth in core areas, margin expansion and disciplined cost control has led to the delivery of 25 per cent earnings growth…In addition we made our first acquisition, Nationwide Autocentres, which represents a natural extension of Halfords service proposition in the car aftermarket and is already making a good contribution to the Group.”
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.
The latest developments in Halford’s complex car servicing history (see Halfords Buys Nationwide Autocentres for £73.2 million – 18/02/10), bring with them a distinct sense of déjà-vous and highlight the cyclic nature of ownership in this industry. From Halfords point of view the latest venture represents a new beginning for a business that is radically different to when it last tried car servicing.
Halfords Group has bought Nationwide Autocentres in a £73.2 million deal, which managers described as the next “logical step” in its expansion plans. Nationwide, which has been owned by private equity group Phoenix since 2006, employs 900 mechanics and serves roughly 500,000 customers a year. Nationwide offers customers and fleets MOTs, servicing and repairs, but also recently increased the emphasis on tyres at its 224 outlets.