Cycles, car parts, camping equipment and vehicle repair specialist Halfords’ (HFD) market value receives a dent as boss Jill McDonald departs for a senior role at Marks & Spencer (MKS).
A second successive CEO defection to a sector rival sees shares in Redditch-headquartered Halfords marked down 11p (3%) to 363.8p, a recent rebound in the equity going into reverse.
Click here to read today’s surprise statement from the FTSE 250 retailer, which states CEO McDonald (pictured below) ‘has resigned from the business to take up the position of Managing Director: Clothing, Home & Beauty at Marks & Spencer.’
Make no mistake, this is a big blow to Halfords, as McDonald has been the driving force behind its ‘Moving Up A Gear’ strategy, one said to be ‘delivering significant momentum across the organisation’.
McDonald is staying on as CEO until October and the search for her successor is now underway.
ANALYSTS’ TAKE
Canaccord Genuity retail analysts David Jeary and Sanjay Vidyarthi give their take on the news from both a Halfords and a Marks & Spencer perspective.
‘This is disappointing for Halfords, who also lost previous CEO, Matt Davies, to a “bigger” role at Tesco,’ explains Canaccord, Jeary and Vidyarthi even adding that ‘Halfords’ Head Office location at Redditch may act as a deterrent to some potential candidates.’
‘This is an interesting appointment from an Marks & Spencer perspective, since Ms McDonald, whose prior roles include long stints at McDonalds and BA, cannot be seen as a clothing expert,’ Canaccord explains.
‘What she does bring is considerable experience in marketing and Customer Relationship Management (CRM), which have become even greater areas of focus under Steve Rowe’s tenure.’
Over at N+1 Singer, retail scribe Matthew McEachran has issued a note headed ‘Ground hog day - CEO departure to FTSE-100 retailer’. McEachran argues McDonald ‘has added significant additional value to the transformation commenced by Matt Davies, and so we regard her departure as disappointing.’
‘Jill will stay on for her 6 months notice period, so at the very least that ensures a smooth transition and may even allow a successor to be appointed in that timeframe. Critically, the business is in good shape and the market may be under-estimated the potential for full foreign exchange mitigation.’
The N+1 Singer sage adds: ‘In light of the increased uncertainty around the leadership we have reduced our target price by 5% to 400p. Having performed well recently, we would regard any big sell off as a new buying opportunity ahead of prelims at the end of the month.’
ROAD TO NOWHERE?
Shares outlined the risks facing Halfords here in March, having been alerted to the potential share price downside by a scathing note from Peel Hunt headed ‘Road to Nowhere’.
The broker highlighted concerns over the retailer’s cycling growth prospects, its exposure to higher oil prices - less cars on the road means fewer collisions and repairs - not to mention the impact of the weak pound on the grounds it would necessitate demand-dampening price hikes.
