UPDATE: Halfords Sees Medium-Term Earnings Rising 15% A Year

10th Jun 2010 10:55

(Adds CEO comment, analysts' comments.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--U.K. automotive and leisure products retailer Halfords Group PLC (HFD.LN) Thursday said it expects earnings to grow about 15% each year in the medium term, on an expanded core retail business, increased earnings from its most recent acquisition and more buys. The retailer, which trades from 469 stores, earlier Thursday reported strong growth in sales and profit for fiscal 2010. Although its diverse range of products weren't totally immune to tightened consumer spending, sales of its goods proved largely resilient during the downturn, it said. Sales of in-car satellite navigation systems remained weak, but snowfall in the U.K. at the start of the year led to a boost in sales of bulbs, blades, batteries and screen washes as car and bike owners sought to stay safe on the roads. Future growth is expected to come from more acquisitions. Halfords has about 10 companies in its sights and is keen to add to its recent buy of the Nationwide Autocentres chain. "Acquisitions are part of the future strategy but not at the expense of the core business and developing Nationwide," Chief Executive David Wild told journalists on a conference call Thursday. As previously stated by the company, Wild said targets would be quality U.K. businesses that wouldn't require a turnaround and are in adjacent markets to Halfords. In Halfords' fiscal 2010, ended April 2, pretax profit climbed to GBP109.7 million from GBP77.5 million a year earlier, while sales rose to GBP831.6 million from GBP809.5 million. It lifted its final dividend to 14 pence a share from 10.9 pence a share in fiscal 2009. This week it began the process of rebranding the acquired Nationwide Autocentres as Halfords Autocentres. It has set the ambitious target of doubling earnings from the Autocentres over the next three years. "Customer feedback has so far been positive but it's very early days. Next week we begin full customer research on the centers," Wild said. Investec Securities analyst David Jeary--who rates Halfords "buy"--said Halfords' fiscal 2010 pretax profit topped his forecast. The firm's focus on "less risky" domestic growth should be welcome news, he told clients in a note. He said Halfords' impressive cash generation supports a number of options for increasing total shareholder returns over time. KBC Peel Hunt's John Stevenson said Halfords' annual growth targets suggest material upside to his medium-term estimates. He had factored in earnings per share growth of 7% in both fiscal 2012 and 2013. "Halfords' core operations remain relatively defensive," he told clients in a note, adding that despite the potential drag of higher taxes and spending cuts, Halfords will likely continue to outperform the retail sector. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires June 10, 2010 05:55 ET (09:55 GMT)