In yesterdays lecture we discussed market scanning & one example given was Halfords ignoring the expertly researched (self flattery - no one else will do it!) report that was submitted to it in 2005 outlining the sensible expansion target countries. At the end of the lecture I was asked whether they had actually been successful in the Czech Republic - I didn't know the answer as while companies are required to publish the corporate results they will rarely break this down market by market. Little did I know that yesterday Halfords provided an update to the city announcing their withdrawal from their international operations in Central Europe (see story below). I am not quite arrogant enough to suggest that they would definitely have been successful if they had adopted the strategy that I proposed, but it is worth reflecting on the fact that in the face of a carefully researched plan developed by someone who had some knowledge of international retailing was rejected in favour of an internal and more anecdotal strategy. How many millions of pounds of have been wasted in setting up and developing a chain of stores over many years and then withdrawing. & the key role of the MD is?? To maximise shareholder value. Sometimes Egos get in the way!
Below extract from http://www.theretailbulletin.com/
Halfords group delivers 13% profit before tax growth
Thursday November 18th 2010
In its interim results for the 26 weeks to 1st October 2010. Halfords group reported revenue of £456.3m, up 7.3% with like-for-like sales decreasing by 4.9%.
Operating profit was up 11.5% to £69.1m representing 15.1% of sales (2009: 14.6%). Profit before tax was £68.7m, up 12.8%.
The Group has seen sales and market share growth in Car Maintenance, Premium Cycling and Outdoor Leisure.
Multi-channel accounts for c.9% of total revenue after further strong growth.
David Wild, Chief Executive, commented on the results,"This has been a period of considerable progress for the Group. In addition to increasing profits, we have successfully completed a number of significant change initiatives. These include the reconfiguration of the Group's warehouse and distribution network, the remodelling of staffing structures and the closure of our Central European operations. In total these reduce costs, enhance customer service and provide a strong platform for our next phase of growth that will be clearly focussed in the UK. We are also pleased to have concluded the refinancing of the Group's debt arrangements on favourable terms.
Our Autocentres business has made good progress, gaining market share. Our development plan is on track with 15 new centres to be opened and the entire network to be re-branded Halfords Autocentres by the end of the financial year. In Spring 2011 we will launch a national advertising campaign to drive sales and firmly position Halfords as the UK's leading independent operator in garage servicing and auto repair. We remain enthusiastic about our investment in this adjacent sector and the opportunity it provides for further profitable growth.
During this period we have demonstrated that Halfords is a resilient and cash generative business that can adapt to our customers' changing needs and deliver growth initiatives for the future. Consumer spending is clearly under pressure and we believe this environment will continue into 2011. We hold market-leading positions however and remain confident that our strategy will deliver long-term sustainable earnings growth.
In the six weeks since the end of the half-year, trading conditions for Retail have remained challenging with like-for-like sales at -5.0%. Autocentres' performance has been encouraging resulting in like-for-like sales growth of +1.2%. We would expect profits for the full financial year to be within the range of market expectations."
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