27th Sep 2018 09:19
LONDON (Alliance News) - Halfords Group PLC, ahead of its capital markets day on Thursday, upped its capital expenditure guidance and committed to preserve its ordinary dividend as part of a new long-term strategy.
To support a programme of investment designed to help the bicycle and automotive parts retailer combat a "rapidly changing retail environment", Halfords said its capital expenditure is to increase to GBP60 million per year over the medium term from GBP40 million currently.
The FTSE 250-listed company aims to use these funds to create a "differentiated" and "specialist" shopping experience with investment in its stores, garages and digital platforms.
Alongside the higher spend, the company said it has started a "wide-reaching" cost-savings programme.
Halfords said it expects pretax profit for the financial year ending in 2020 to be broadly flat on 2019, with "mid-single-digit percentage annual growth" anticipated thereafter.
The retailer also set out a commitment to preserve its ordinary dividend, with a target to grow this every year, as well as to increase free cash flow.
"We are a strong and growing business, that benefits from a solid financial platform and highly experienced and capable colleagues. However, customer behaviours and the competitive environment are changing and we face an increasing number of headwinds. Our new long-term strategy means we will become far more focussed on the categories we are best known for, motoring and cycling," said Chief Executive Graham Stapleton.
He added: "Customers will also benefit from unique product, services and shopping experiences all underpinned by integrating the separate businesses within the group. We have an exciting future ahead and I am confident that we will become even more relevant to motoring and cycling customers in the future."
Late Wednesday, Sky News reported that Halfords is among a number of parties that have made an indicative takeover offer for struggling bicycle retailer Evans Cycles. Sky noted that Evans, which was founded nearly a century ago and trades from over 60 stores across the UK, requires more than GBP10 million in fresh capital to see it through the next few months.
Halfords made no mention of Evans in its statement on Thursday.
Shares in Halfords were down 5.6% at 316.80 pence.
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