Halfords will need a new boss to continue success

Halfords's latest results demonstrate an underlying resilience, with the retailer now reporting sales growth for the 20th consecutive year, which averages at more than 7% per annum. As well as achieving strong growth in all of its categories, Halfords continued its space expansion, improved its product range and made improvements to its multi-channel credentials by introducing a 'Reserve and Collect' service. Halfords now has 450 stores and believes that there is capacity in the UK and Republic of Ireland to open a further 100 stores, albeit down on its earlier prediction of 130 in 2007. By taking advantage of the improved availability of retail property, another 20 stores are destined to open by 2009. Halfords intends to create up to 40% extra space through supermezzanines and mezzanines in superstores, which it will dedicate to its Bikehut offer. This will also allow for an optimum product range and the full benefit of the Technology and Travel sub-shops to be realized. Of the 17 superstores opened during the year, 13 had supermezzanines, and the focus, rather sensibly, is to introduce more across the superstore estate. Having launched its neighborhood store format two years ago, the concept is being rolled out, and, with eight opened during the year, the total now stands at 24. Continuing to take advantage of international opportunities, Halfords intends to open five more superstores than originally intended in the Republic of Ireland, has added three stores in the Czech Republic and is taking full advantage of the fast growing Polish economy by planning to open a store in the country by autumn 2008. Investing in the standalone Bikehut concept, which was launched to exploit the resurgence in cycling popularity and the fragmented but robust nature of the bike market, is paying off. There are now five stores, with a long-term target of 50 and a dedicated website to be launched in 2008. The in-store Bike Doctor aspect of the format is not only a major revenue driver, but is helping to establish Bikehut as a brand and destination store. Meanwhile, car maintenance continues to be a major source of growth, due, in part, to Halfords's back to basics approach, but mainly to the needs-based nature of the product. Car enhancement also performed strongly, driven by the demand for satellite navigation and audio systems that allow digital music to be played through car speakers. It is hard to find fault with Halfords, and, despite recent growth by Evans Cycles and MotorWorld, it still has no direct competitor and is getting it right across all aspects of the business. Its considerable authority across its product categories, which cover both needs-driven items in car maintenance and wants-driven items in car enhancement, provides some resilience to the current consumer downturn. Halfords is also only just beginning to exploit the growth opportunities provided by Bikehut, international operations and an online offer. However, the retailer's recent success can be attributed to the dynamic and proactive management team. If Halfords is to continue its upwards march unabated, appointing a suitable replacement for chief executive Ian McCloud, who left in February, will be challenging, but vital. Source: Verdict Research