Just
a
few
days
after
Black
Friday
and
ahead
of
the
key
Christmas
trading
period,
a
profit
warning
from
UK
car
parts
and
bikes
firm
Halfords
sent
the
shares
down
20%.
The
aggressive
share
price
move
underlines
the
fragility
of
consumer-sensitive
stocks
at
a
difficult
period
for
the
UK
economy.
It’s
also
consistent
with
recent
earnings
season
moves
when
companies
have
lowered
profit
forecasts.
Shares
fell
20%
nearly
50p
to
£1.81,
erasing
all
the
year’s
gains
so
far,
as
the
company
lowered
its
full-year
profit
guidance
by
£5
million.
But
first-half
results
were
reasonably
solid:
revenue
was
up
nearly
14%
to
£873.5
million,
driven
by
a
strong
performance
from
Autocentres,
where
people
take
cars
for
MOTs
and
services.
Pre-tax
profit
rose
just
3.3%
to
£19.3
million
on
the
same
period
last
year.
Halfords
highlighted
the
contrasting
performance
of
its
different
divisions:
“needs
based”
categories
like
motoring
are
still
doing
well,
but
discretionary
markets
like
cycling
are
below
expectations.
The
company
said
it’s
hard
to
predict
how
this
segment
will
do
in
the
rest
of
the
year
because
of
weak
consumers
sentiment.
It
seems
a
long
way
away
from
headlines
during
the
pandemic
era
celebrating
Halfords’
record
cycle
sales.
“While
it
has
a
competitive
strength
in
being
one
of
the
few
national
brands
to
sell
bikes,
thereby
making
it
front
of
mind
for
consumers
looking
to
buy
such
products,
this
remains
a
highly
discretionary
purchase
and
therefore
earnings
visibility
is
poor,”
said
AJ
Bell
investment
director
Russ
Mould.
While
a
new
bike
was
a
Christmas
staple
for
children
in
years
gone
by,
other
competing
presents
like
games
consoles
have
now
moved
to
the
top
of
Santa’s
wishlist.
Cycling
has
also
become
more
expensive
in
the
inflation
era,
with
even
standard
models
commanding
much
higher
prices.
Underlying
pre-tax
profit
will
now
fall
within
a
narrower
range
of
£48m
to
£53m,
the
company
said.
For
the
rest
of
the
financial
year,
the
company
is
planning
to
focus
on
the
motoring
side
of
the
business
via
its
loyalty
club.
But
this
is
not
straightforward
win
either,
says
Aarin
Chiekrie,
equity
analyst
at
Hargreaves
Lansdown:
“But
for
all
the
positives
around
the
group’s
growing
autocentres
division,
a
lack
of
skilled
labour
has
been
holding
back
progress
to
some
extent.
That
has
made
it
more
difficult
to
service
demand
and
could
limit
the
group’s
ability
to
carry
out
more
complex
and
lucrative
work.
Finding
enough
trained
staff
to
plug
the
hole
won’t
happen
overnight.”
The
growth
of
electric
vehicles
have
also
upped
the
skillset
for
car
mechanics,
increasing
competition
for
their
labour
and
pushing
up
wages.
Halfords
had
recently
been
talked
of
as
a
potential
takeover
target,
with
van
rental
company
Redde
Northgate
making
a
£1.4
billion
approach.
After
this
morning’s
slump,
Halfords
is
value
at
just
below
£400
million.
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