Halfords' big profit chill

But this remains the same Halfords that caused a major selloff in January when it released a profit warning complaining about the mild winter weather. Despite the cycling focus, 60 per cent of its revenue still comes from auto-related sales.

As warned in January, Halfords’ underlying pre-tax profit for the 12 months to 31 March fell 18 per cent on the year before, to £58.8m – at the low end of revised guidance. Liberum had forecast almost £70m before the company said the numbers were not tracking as hoped.

Chief executive Graham Stapleton said “extremely mild” weather in the year had hit sales related to cars. The company said the temperatures meant people did not buy as many ‘bulbs, blades and batteries’ (3Bs) as in previous years.

There was a positive from the warmer winter weather, however: the conditions encouraged cyclist to spend 2.6 per cent more year on year. Electric bike sales also increased by 47 per cent year on year on a like-for-like basis, and now account for 11 per cent of bike sales. Halfords is positive about this trend, but said overall conditions would not pick up immediately. “While we remain confident in the long-term growth prospects for the cycling market, we expect short-term underlying economic conditions to continue to be challenging... cycling continues to be a discretionary, big ticket category and is not immune to consumer uncertainty.”

Bloomberg consensus forecasts suggest adjusted pre-tax profit of £58.6m for the March 2020 year-end, leading to EPS of 23.9p, rising to £60.7m and 24.8p in FY2021.