Halfords cuts profit forecast as shares slide

Halfords warned higher investment in stores meant profit would be lower than previously forecast in the next financial year, sending shares in the retailer down 7 per cent by late morning.

The company, which sells car accessories, servicing and cycling products, said there was no change in forecasts for the year to March 2019, when profit is expected to be little changed on the previous year.

But in 2020, investment in the store estate will reduce profit.

House broker Investec cut its earnings estimate by almost 8 per cent and lowered its target price to 350p.

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Graham Stapleton, the chief executive who was poached from Dixons Carphone earlier this year, said the group would focus more on motoring and cycling in future, withdrawing from markets such as camping and leisure which he said "confused" customers.

In May, Halfords shares fell after it warned that price inflation in cycling products had eased, and that the weaker pound was hitting profits. Many cycles are made in Taiwan or China, so wholesale prices are effectively set in dollars.

The company declined to comment on a Sky News report that it has tabled a bid for Evans Cycles, a smaller chain owned by private equity group ECi.

Evans, which operates mostly from town-centre stores in London and the south-east of England, has been lossmaking for the past two years as it expanded outside its traditional heartland.

It competes with Halfords’ Cycle Republic, which the group intends to expand to over 50 units from the current 24 as part of its new strategy. – Copyright The Financial Times Limited 2018