Halfords pulls out of Central Europe

Loss making division set to close this summer
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Loss making division set to close this summer
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Halfords is to shut seven stores in the Czech Republic and Poland later this year, following the chain's operating loss of £2.8 million in the area.

The withdrawal – revealed in Halford's latest pre-close statement – is expected to produce an uplift in earnings in the next financial year for the retailer.

The statement also revealed that prolonged winter weather had seen the leisure category perform beneath expectations. Cycle revenues increased modestly by 1.9 per cent like-for-like. Car maintenance product and service, however, delivered like-for-like growth of 13 per cent.

“With sustained growth expected from the UK retail business and the domestic focus of the Group's acquisition strategy, we have decided to close our seven stores in Central Europe," said CEO David Wild.

"Recent performance has improved and the region has long-term attractive characteristics, but the continuing recession is severely limiting the property opportunity to move the operation to a viable scale. While an international strategy clearly represents an opportunity for future growth, the Board has decided that management and financial resource is better devoted, at the present time, to the lower-risk return opportunities in our core market."

Wild also commented on Halfords' wider positive performance:

"Halfords retail performance continues to be robust, with full year earnings now anticipated to grow by approximately 25 per cent. The acquisition of Nationwide Autocentres, completed during the quarter, logically extends our successful service proposition and provides a further opportunity for future growth.

“The financial year has been a positive one for Halfords and with both of our divisions continuing to trade strongly in the fourth quarter, we expect that full year Group earnings before exceptional items will be ahead of market expectations. Looking forward, while the consumer environment remains challenging, we are confident that our leading positions, combined with further cost saving initiatives, will enable us to deliver another good result in FY11."

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