2 Retail Stocks in Focus: Halfords Group Plc and Motorpoint Group Plc

Summary

  • Halfords Group Plc reported a 13.1% rise in revenue in FY21 recommended a dividend of 5p per share.
  • Motorpoint Group Plc revenue for FY 21 witnessed a 29.1% drop.

2020 was a year unlike any other, which severely impacted retail sector growth. Many stayed away from physical stores because of lockdown and spread of the virus, widely adapting to online shopping, which saw e-commerce gain market share and online sales jump multifold. Recent ease in restrictions has given hopes to brick and mortar stores as it allowed people to step outside and shop in-store, and the same was reflected in UK’s retails sales data of May month which surged to 9.2% against.

Let us focus on the result of two stocks from the retail sector and see how covid-19 affected their earnings:

Halfords Group Plc (LON: HFD)

It is UK’s leading provider of motoring and cycling products and services. This multi-retail chain operates through two key divisions – the retail segment, which is involved in sales of automotive, electric bikes as well as clothing and accessories through its 446 retail outlets and online website. In addition, the company’s car servicing segments provides maintenance and auto repair services.

For the year ended 31 March 2021, the company reported a 13.1% rise in revenue to £1,292.3 million (FY20 revenue: £1,142.4 million) and the profit before tax of £64.5 million (FY20: £22.7 million) higher profits were attributed to market share gain of 9.7% by Autocenters segment.

The company reported basic earnings per share (EPS) of 40.7p and has proposed a final dividend of 5p per share.

Outlook for FY22:

The company continue to have a positive outlook for FY22 and expect further market share gain in its Autocentres Business and is targeting a pre-tax profit of £75 million. It has also proposed to give FY22 dividends of 9p per share.

The share of Halfords Group Plc was down by 3.24% at GBX 412.40 on 18 June at 9:32 am GMT+1. In the last 1-year, the stock has delivered a 142% return to its shareholders.

Also Read: How are these two consumer stocks going to perform during the winter season: Halfords Group and Wynnstay Group?

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Motorpoint Group Plc (LON: MOTR)

Motorpoint is UK based vehicle retailer which sells pre-owned cars and new vehicles of various leading automobile brands like Ford, BMW, Jaguar. The company operates 14 retail stores as well as online websites for its service. In addition, the company sells insurance and vehicle paint protection products.

In FY21, the revenue of the company saw a dip of 29.1% to £721.4 million (FY20: £1,018 million) with a pre-tax profit of £9.7million (FY20: £18.8 million). The major reasons for revenue fall were the COVID-19 pandemic and government imposed lockdowns.

During the year, the company significantly invested in upgrading technology, and marketing infrastructure, which will further enhance e-commerce opportunity going forward. Also, a new branch was opened at Stockton in December 2020, which expanded the company’s network to 14 retail stores.

The company reported basic earnings per share (EPS) of 8.4p, which was down by 48% compared to FY20 EPS of 16.4p.

Motorpoint Plc shares were trading at GBX 315, up by 0.96% on 18 June at 9.26 am GMT+1 with a market-cap of £281.39 million. In the last 1-year, the stock has given a 26.26% return to its shareholders.

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