Halfords appoints new CEO after stellar second quarter -UPDATE

4th Oct 2012 07:08

Car and bike parts retailer Halfords has appointed a new Chief Executive Officer (CEO) following the abrupt departure of David Wild in the summer, as it revealed that full-year profits would be at the top end of guidance after a strong second quarter.Halfords announced late last night that it has appointed Matt Davies, the former CEO at Pets At Home, as its new frontman with immediate effect. He will be replacing Wild, who agreed to leave the board back in July. Halfords Chairman Dennis Millard commented at the time that it was "the right time for a change of leadership".Speaking on Thursday, Millard said: "[Davies] joins us at an opportune time for the company and will drive the execution of the three-pillared strategy laid out to shareholders earlier this year. We look forward to his significant contribution to the future success of the group."Trading picks up in the second quarterThe company expects pre-tax profit to be in the region of £40-42m in the first half on the back of its second quarter performance and an acceleration of operating cost investment. The consensus estimate currently stands at just £35.8m.In the quarter ended September 28th, group revenues rose by 6.2% year-on-year, a sharp contrast to the 5.2% decline seen in the first three months of the year. Like-for-like (LFL) sales fell by 0.1% over the half, after combining the 5.6% fall in the first quarter with the 5.6% increase in the second.Reported sales growth for the half was 0.4%, while LFL sales were down 0.1%.Retail sales growth improved to 4.3% from a 7.8% fall previously, helped by strong trading in Cycling fuelled by better weather and the Tour de France and Olympics. Car Maintenance and Enhancement put in a solid performance, though there was some weakness in Travel Solutions where the company expected reduced demand for camping products.As for the Autocentres division, revenue growth picked up from 14.5% to 19.9%. LFL growth was 12.4%, the strongest LFL performance since its acquisition in February 2010. Outlook still cautiousDespite the strong performance in the second quarter, the group said that full-year guidance remains unchanged, though pre-tax profits should be at the upper end of the guided range (£62-70m).Millard said: "Our trading stance together with the actions we took to capitalise on a successful summer of sport and improved weather meant we delivered a stronger Retail top line in the period, recovering some of the ground lost in the Spring. We continued to be encouraged by the performance of Autocentres."However, he said that the group's second-half planning assumptions remain "cautious" given the "prevailing pressures on the consumer as we approach the important winter and Christmas trading periods."Shares should have a good day, Panmure saysFor analysts at Panmure Gordon: "The second quarter performance is a very strong turnaround after the depths of the first quarter. While perhaps some of the improvement is a one-off, the new chief executive has a stronger platform than he might have expected as he starts his first day. We are increasing our target price from 220p to 300p to reflect the better P&L performance, our greater inclination to accept management guidance for the second half and the appointment of a high pedigree Chief Executive. At our new target price the shares would trade at 9.7x earnings and yield 5%. The shares should have a good day today."