Halfords Has Biggest Decline in Six Months on Lower Profit
Halfords Group Plc (HFD), the U.K.’s biggest seller of car parts and bicycles, fell the most in six months in London trading after it said pretax profit may be slightly lower than estimates as the squeeze on consumer spending started to hit sales.
Pretax earnings will be between 124 million pounds ($203 million) and 127 million pounds for the year ended April 1, the Redditch, England-based company said in a statement today. Same- store retail sales declined 6.8 percent in the fourth quarter, compared with 5.5 percent for the full year.
The biggest squeeze on public spending since World War II coupled with tax rises is curbing consumers’ willingness to spend money on things like car maintenance, while increased real estate taxes, fuel costs and carbon offset charges can’t be recovered from higher prices.
“Halfords appears to be another retailer confirming the slow retrenchment of UK consumers,” Hargreaves Lansdown Plc analyst Keith Bowman said in an e-mailed comment. “There is no disguising the increasingly difficult conditions being faced by the company.”
The shares fell 18.6 pence, or 5.1 percent, to 350 pence, the biggest fall since Oct 7., extending its decline in the period to 14 percent.
Halfords plans to buy back as much as 75 million pounds of shares in a program starting today, the company said.
“The consumer environment is uncertain and challenging,” Chief Executive Officer David Wild said on a conference call. “The downward trajectory in second-half sales is what we are guiding to going forward.”
Analysts had been estimating pretax profit of 127.6 million pounds for last year, Wild said. Today’s forecast wasn’t a profit warning, he said. Analysts’ estimates had been based on group sales increasing 5 percent, and revenue will be about 4.6 percent higher at about 869 million pounds, he said.
“We are trading the business as hard as we can,” Wild said. “That is what we are focusing on.”
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