Halfords. Handing credit to the weather.
Halfords told the City a hot summer had handed it an extra 5 million in profit. Shares jumped more than 10%, because almost no company separates out the part that was luck.
THE GIST ON HALFORDS: "Halfords and the Heatwave"
What did Halfords admit?
Last week, Halfords told the City the hot summer had handed it an extra £5 million in profit. It volunteered it, put a number on it, and then its shares jumped more than 10% to a four-year high. Almost no company separates out the part that was luck.
We've had a hysterically hot summer, and Halfords sells bikes, camping gear, cool boxes and aircon, so it had a very good few months. Its update said its performance reflected momentum in the business and, in part, the unusually warm weather.
What's a set of results made of?
Profits are now forecast at between £55 million and £65 million, which is more than the City had predicted. Think about what a set of results actually is. Some of it is what the company did, some of it is what happened to it, and you can spin it perfectly.
A good year is a strategy working. A bad year is environmental factors.
Was it all weather?
Halfords has plenty to shout about. It started electric vehicle servicing, and like-for-like sales were up 4.8%. But it handed that £5 million back to the weather anyway.
If we'd had a crap summer, every pound spent on a cool box could have been in a cinema, or a pub with no garden, or a waterproof. Somewhere else in Britain, a company had a really bad summer for the same reasons Halfords had a good one.
What does that mean for us?
Every scoreboard has the weather in it. Yours does. The year you smashed your target, the market was rising. The quarter you missed, something arrived that nobody saw coming.
We hand out credit and blame as if results are made of decisions, but they're half chance. Most of what we call talent is just standing in the right place when the sun comes out. Halfords just told you exactly where they were standing.
Do you credit luck or skill for your best year?
Your take. One tap, then see how everyone else voted.
Quick answers
What did Halfords say about the weather?
That the hot summer gave it an extra £5 million in profit, and its shares jumped more than 10% to a four-year high.
What are Halfords' profits forecast at?
Between £55 million and £65 million, more than the City had predicted.
What is Huw's point?
Results are half chance. We credit decisions for good years and blame environmental factors for bad ones, and most talent is standing in the right place when the sun comes out.
See you on the next one.
What should the next one be? Suggest a topic for Huw to explain
The conversation
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