Case for buying Halfords is 'compelling' says Singer

22nd May 2014 13:58

Broker N+1 Singer says the investment case in Halfords 'remains compelling' after the bikes and car accessories retailer delivered impressive annual results. "Halfords has delivered a very solid full-year performance given the change underway within the business," wrote analyst Matthew McEachran, saying the 'Getting into Gear 2016' strategy was one of the most impressive turnaround plans he'd seen for some time.He noted good progress with the strategic ambitions outlined a year ago, including staff training and engagement, customer service levels and encouraging results from the new and refreshed stores. "This has been a successful first year of change under the management team lead by Matt Davies, and the group looks well set to achieve their stated ambition of £1bn in full year 2016."After management guided to a retail gross margin decline of 25-75bps this year, with further cost increases of 4-5% and capex slightly higher at £43m, McEachran said he expected consensus pre-tax profit estimates to rise by around 3% today towards £77m-£78m, with a lower tax charge and lower financing costs good news for EPS growth. "Confidence in outer year forecasts is underpinned by the strategic initiatives being implemented, and with further upgrades possible in the short term due to improving UK consumption, the investment case remains compelling."A 'buy' recommendation was reiterated.OH