Halfords shares stoop 24% on moist climate revenue warning
- Halfords now expects annual underlying pre-tax earnings of £35m to £40m
- It blamed the downgrade on subdued buyer confidence and unhealthy climate
Halfords shares nosedived on Wednesday after the group slashed its annual revenue steering amid continued weak buying and selling throughout most of its core markets.
Britain’s largest biking and motor companies retailer noticed its share worth plunge by 23.7 per cent to 153p by midmorning, making it the second- largest faller on the FTSE All-Share Index behind monetary advisory agency St James’s Place.
The firm warned traders that it now expects underlying pre-tax earnings of between £35million and £40million for the yr ending 29 March.
![Deep trouble: Halfords shares dived on Wednesday as the group slashed its annual profit guidance amid continued weak trading across a majority of its core markets.](https://i.dailymail.co.uk/1s/2024/02/28/09/81810501-13134765-image-a-4_1709113173179.jpg)
Deep bother: Halfords shares dived on Wednesday because the group slashed its annual revenue steering amid continued weak buying and selling throughout a majority of its core markets.
This in comparison with £43.5million within the earlier monetary yr and prior forecasts of £48million to £53million.
It blamed subdued buyer confidence and ‘unusually delicate and really moist’ climate throughout the biking and retail motoring markets for damaging retailer footfall and gross sales of some items like winter equipment and automobile cleansing merchandise.
Halfords additionally stated the biking sector was ‘more difficult and aggressive’ as a result of an increase in promotions and Britons shopping for items on credit score, which is hitting gross margins greater than anticipated.
Bike purchases in Britain plummeted to their lowest stage in almost 4 many years final yr, in accordance with the Bicycle Association, amid main cost-of-living pressures and a stoop within the recognition of biking.
The drop represents a stark departure from the lockdown period when decreased automobile utilization, a better reluctance to journey on public transport, and rising environmental issues led to a biking increase.
However, Halfords’ motoring arm and garages enterprise, Autocentres, has finished comparatively nicely for the reason that finish of Covid-related restrictions.
In the six months ending 29 September, its Autocentres division noticed like-for-like gross sales develop by 18 per cent and complete income improve by roughly a 3rd to £356.9million.
Since its final buying and selling replace in January, Halfords stated the section has continued to realize ‘good development’ because of sturdy demand for buyer restore companies offsetting a weaker shopper tyres market.
The Redditch-based firm believes underlying pre-tax earnings for the subsequent monetary yr will broadly align with its 2024 outcomes, though it will partly depend upon development throughout its core markets and improved margins in its biking enterprise.
It instructed traders: ‘Whilst we now have diminished our revenue steering because of very difficult and distinctive short-term market situations, we stay assured in our technique and longer-term development prospects.
‘When our core markets recuperate, the platform we now have constructed leaves us exceptionally well-placed to succeed.’
Investec analysts stated: ‘Halfords money technology means it could actually trip out the present, very difficult, short-term market setting with out impacting its sturdy steadiness sheet or its future capex plans, and is well-positioned for when markets recuperate to ship materials revenue upside.’