Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shares in Halfords plunged more than 25 per cent on Wednesday morning after the UK bike and car parts seller issued a profit warning on the back of wet weather and weak consumer confidence.
Halfords said in a trading update that it expected underlying profit before tax to be between £35mn and £40mn for the year to March 29, down from a previous estimated range of £48mn to £53mn.
The company said both the cycling and retail motoring markets had been affected by “a combination of continued weak customer confidence and unusually mild and very wet weather”, pointing to “challenging market conditions”.
Halfords said that since January it had seen a “further material weakening” in three of its four core markets, resulting in a “significant drop” in like-for-like revenue growth in its retail business.
The notice pushed down shares in the London-listed group, which has 386 shops and 645 garages across the UK, by more than a quarter in morning trading on Wednesday.
Russ Mould, investment director at AJ Bell, said the updated guidance meant “Halfords has gone back to days of old where it would regularly disappoint with earnings guidance and always have some excuse as to why its business is not running smoothly”.
Halfords said that although it had “continued to take decisive action on cost . . . in the short period between now and the end of the financial year, this will not be sufficient to offset the significant market deterioration we have seen”.
It added: “Looking ahead to [2025], we remain cautious on market recovery in the short-term, and the current significant volatility in market conditions means that forecasting accurately is challenging.”
In the year to March 2023, Halfords posted an underlying profit before tax of £51.5mn, compared with £89.8mn the previous year.
Data published this month by research group GfK showed consumer confidence dipped in February, driven in part by a fall in consumers’ assessment of their personal financial situation.
Read the full article here