Anyone fancy Halfords shares?

IronWolf

I've looked at Halfords before. Their car maintenance revenue has been declining, offset by strong cycling revenue and 'added value' at the counter like offering to fit things.

I do like their new autocentre business though, and think thats a very good growth area, but at the moment it's a small part of the business and if car maintenance sales dont stop their decline they could get into trouble.

They aren't in trouble yet, and the dividend looks ok, but their car maintence sales arent showing signs of recovery so thats why I'm not invested in them.

w211

I drive for a living and never had to go into Halfords for anything. Bulbs are often cheaper on eBay, and I bought a Tomtom Satnav on eBay for £229.99, which was £299.99 in Halfords.

Basic car maintenance and car care items are cheaper in big Tesco/Sainburys/Asda or Poundland, such as air fresheners, interior/upholstery wipes, screenwash etc.

Bought a three in one 12v accessory multi adaptor in Poundland which would have been £7.99 in Halfords.

gadgetmind

sabretoothtigger wrote: »

I dont like retail in general, we are talking about margin compression not expansion. Great if you are buying but sellers I see as under pressure unless you pretty darn smart.

The only retail I hold is where I either see them as having good "moats" due to planning issues and having a strong supply side (Sainsburys) or where they have already woken up to the new world order and are making it work for them (Brown (N)).

I've got nothing against Tescos, but am glad I held off. I'm also pleased that I didn't go for Ocado - too much potential and powerful competition for my liking, and from personal experience, they don't work hard enough to retain existing customers versus trying to win new ones.

gadgetmind

w211 wrote: »

I drive for a living and never had to go into Halfords for anything..

Agreed. I get most stuff from ebay, and the one time I needed something in a hurry and went there, they didn't have it. I kind of thought that a "performance" section might have pressure tubing for my supercharger project, but it was all "coffee can" exhausts.

Oh, hang on! I did recently get something from them. I needed to replace an oil breather hose in a hurry (back of the block, as always!) and their web site and stock system said they had it. It took them 20 mins to find it, and then had to call someone to ask how to cut it and what to charge.

Sheesh!

Glen_Clark

IronWolf wrote: »

if car maintenance sales dont stop their decline they could get into trouble.

Car maintenance product sales have declined as many more shops are selling the fast moving products, notably pound shops, which is encouraging people to look at Halfords price tickets :eek:
Its a bit like Curry's sales declined as supermarkets started selling electronic goods. But the supermarkets are finding making money in that market is trickier than they thought, and are partially pulling out. (you get a lot of stuff brought back as 'faulty' by idiots who don't know how to operate it)
I see no reason why Halfords competitors should pull out though.
If I was looking for a gamble, I would prefer Currys/Dixons.

Radiantsoul

A lot of retailers seem to have too many stores and are paying to high rents. Stores that are profitable can find themselves hit by a fall in sales and margin erosion. I suspect that in the long run rents on stores will fall and this will provide a boost to the sector, and competition will diminish.

I am somewhat surprised Halfords are buying back shares as they presumably need some cash to work on their strategy(their stores look a little tired to me). As a specialist retailer they operate in a similiar sector to Mothercare, Game, Comet, HMV, etc. They dominate the portion of retail they specialise in, but their are risks.

Glen_Clark

Radiantsoul wrote: »

I am somewhat surprised Halfords are buying back shares as they presumably need some cash to work on their strategy(their stores look a little tired to me).

High yields and share buybacks are more likely to increase the (short term) share price, which is better for the Director's bonuses.

Lokolo

Funnily enough I needed to go to Halfords. I don't tend to trust ebay and I needed the stuff in the next week so couldn't go to Amazon.

I was actually rather impressed by the store. I found exactly what I needed very quickly (I have found some stores, boots in particular, don't lay out their stores at all well and it frustrates me trying to find something). The staff were very friendly.

But obviously the price I paid was high. I needed a fire extinghiusher (sp) and a European breakdown kit. £60 in total. I would have saved ~£10 on Amazon.

The last time before that I went to Halfords was to buy a car radio, which was about 5 years ago! I am surprised they are struggling, most people have cars and if I ever wanted something for my car I have no idea where I would go (retail space) for car items.

---

Oh yes and the staff were knowledgeable. I found out from July, in France you need breathalyser kits.

gadgetmind

Radiantsoul wrote: »

I am somewhat surprised Halfords are buying back shares as they presumably need some cash to work on their strategy

Agreed. Their dividend cover is only 1.5, which means that 2/3rds of earnings are being dished out to shareholders, which doesn't leave much for investment in the business.

Buying back shares *can* boost share price, but not as much as improving the business and thus the dividend cover. 1.5 is already low, and forecasts are for 1.4 next year, which is enough to keep Halfords off my watch list.

Glen_Clark

gadgetmind wrote: »

Buying back shares *can* boost share price, but not as much as improving the business.

Yes but that takes brains and it tends to take longer to work.
I guess the Directors are just out to make a fast buck?