Halfords Group PLC (HFD)
Halfords Group PLC: Proposed closure of Cycle Republic and Boardman
Performance Centre
16-March-2020 / 09:00 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
16th March 2020
Halfords Group plc
Proposed closure of Cycle Republic and Boardman Performance Centre
Halfords Group plc ("Halfords" or "The Group") today announces a proposal to
close the operations of Cycle Republic and the Boardman Performance Centre
("Cycle Republic") following a strategic review of the Group's cycling
businesses.
Our proposal links directly to our strategic update in November 2019. At the
time, we outlined our intent to improve the profitability of our cycling
business and the proposed closure of Cycle Republic reflects the challenging
economics of a store-based dedicated performance cycling operation. Exiting
a low-returning, stock intensive business allows us to improve our return on
capital whilst freeing up investment and resources to continue to drive our
services-focused strategy, with an emphasis on accelerating the growth of
our motoring businesses. The proposed closure is expected to be marginally
accretive to earnings in FY21 and will also enhance cashflow and net debt on
an ongoing basis, principally through lower working capital requirements.
Performance Cycling is an important category for Halfords. We currently
serve the enthusiast cycling market through Tredz, a predominantly online
business, and through Cycle Republic, a commuter led, store and online
offer. Going forward, we believe we will better serve this market by
singularly focusing our investment and resources into the Tredz brand, which
has both a differentiated and specialist customer proposition and a superior
business model in this part of the cycling market.
With investment in the Tredz business, alongside our core Halfords Retail
cycling business, we believe we will be uniquely placed to serve both the
enthusiast and the mainstream customer in a more economic way than we do
today.
From today we will launch a consultation process with the 226 colleagues
affected by the proposal, with a view to mitigating redundancies where
possible. We are also actively exploring opportunities to sell the sites as
a going concern. Subject to the outcome of current negotiations and
consultation, the stores are expected to close during the first half of
FY21.
The proposed closure does not affect the previously stated profit guidance
for FY20. In the year ended 29 March 2019 Cycle Republic made a loss of
GBP4.3m, with the FY20 loss expected to be materially smaller. The gross
assets attributable to Cycle Republic were GBP27.0m as at 27 September 2019,
which includes GBP14.4m relating to a right of use asset under IFRS16. There
will be pre-tax exceptional costs associated with the implementation,
subject to the outcome of the consultation process, which are currently
estimated to be GBP25-35m, with the majority being cash costs. The majority of
these cash costs relate to the existing retail store lease arrangements and
therefore will be incurred over the period of the remaining leases, which
have an average length remaining of 4.9 years. All numbers provided are on a
pre-IFRS16 basis, unless otherwise stated. A further update will be provided
in Halfords Preliminary Results release on 2 June 2020.
Graham Stapleton, CEO said:
"The Board has come to the difficult, but necessary, decision to propose the
closure of Cycle Republic, our retail store-focussed performance cycling
brand.
This proposal is not a reflection of the hard work of our Cycle Republic
colleagues, who I would like to thank for their commitment and passion in
serving our customers. We are now moving into a period of consultation with
impacted colleagues with a view to mitigating as many redundancies as
possible.
Going forward we propose to focus our investment and resources in Halfords
and Tredz, through which we will deliver market-leading specialist
propositions for both mainstream and enthusiast cyclists via a business
model that improves our overall economics."
Enquiries
Investors & Analysts (Halfords)
Loraine Woodhouse, Chief Financial Officer
Neil Ferris, Corporate Finance Director +44 (0) 7483 360 675
Media (Tulchan) +44 (0) 20 7353 4200
Will Palfreyman
Will Smith
Conference Call
There will be a conference call for investors and sell-side analysts
beginning at 10.30am today (UK time). The participant dial-in is +44 (0)333
300 0804 or 0800 358 9473 (toll free). The PIN is 52437927#.
Reporting Calendar
On 2 June 2020 we will report our annual results for the 53 weeks ending 3
April 2020 along with an update on our plans for FY21.
Notes to Editors
www.halfords.com www.halfordscompany.com [1] www.halfordsautocentres.com [2]
www.cyclerepublic.com [3] www.boardmanbikes.com [4] www.tredz.co.uk [5]
Halfords is the UK's leading provider of motoring and cycling services and
products. Customers shop at 446 Halfords stores, 26 Performance Cycling
stores (trading as Cycle Republic, Tredz, Boardman and Giant), 369 garages
(trading as Halfords Autocentres) and have access to 75 mobile service vans
(trading as Halfords Mobile Expert). Customers can also shop at
halfords.com, cyclerepublic.com and tredz.co.uk for pick up at their local
store or direct home delivery, as well as booking garage services online at
halfordsautocentres.com.
Cautionary Statement
This report contains certain forward-looking statements with respect to the
financial condition, results of operations, and businesses of Halfords Group
plc. These statements and forecasts involve risk, uncertainty and
assumptions because they relate to events and depend upon circumstances that
will occur in the future. There are a number of factors that could cause
actual results or developments to differ materially from those expressed or
implied by these forward-looking statements. These forward-looking
statements are made only as at the date of this announcement. Nothing in
this announcement should be construed as a profit forecast. Except as
required by law, Halfords Group plc has no obligation to update the
forward-looking statements or to correct any inaccuracies therein.
ISIN: GB00B012TP20
Category Code: REP
TIDM: HFD
LEI Code: 54930086FKBWWJIOBI79
OAM Categories: 3.1. Additional regulated information required to be
disclosed under the laws of a Member State
Sequence No.: 52537
EQS News ID: 997895
End of Announcement EQS News Service
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(END) Dow Jones Newswires
March 16, 2020 05:00 ET (09:00 GMT)
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