Halfords cuts profit forecasts as mild weather hits sales
The retailer said weak consumer confidence had also held back big-ticket purchases.
Halfords has issued a profit warning after mild weather and weak consumer confidence hit its sales.
The car and cycling retailer now expects profit for the 2019 financial year to be between £58 million and £62 million. Analysts had been predicting closer to £70 million.
The group also expects its 2020 profits to be flat, due to an expectation that consumer confidence will remain weak in the aftermath of Brexit.
Shares in the company were down more than 20% in early trading on Thursday.
It comes after group revenue fell 1.7% on a like-for-like basis during the 14 weeks to January 4.
Retail sales fell 2.2%, with a particularly weak performance in motoring sales, which fell 3.4% as drivers put off buying weather-related products in the balmy autumn.
Cycling was broadly flat, dropping 0.3%. Growth in children’s cycling and accessories was offset by a decline in big-ticket adult bikes.
Halfords is a robust business and we firmly believe that the strategy we outlined in September is the right direction for the business Graham Stapleton, Halfords CEO
Meanwhile, Autocentres grew by 1.4%, continuing a trend for drivers to maintain existing cars rather than buying new vehicles as consumer confidence dwindles.
Chief executive Graham Stapleton said: “This has been a challenging third quarter for the business, driven by exceptionally mild weather and ongoing weak consumer confidence.
“Together, these factors have led us to reduce our profit expectations.
“Whilst this has been a difficult period, we have managed costs and margin well and our free cashflow remains strong.
“Halfords is a robust business and we firmly believe that the strategy we outlined in September is the right direction for the business.”