A profit warning from Halfords (HFD) prompts us to rethink whether new chief executive Graham Stapleton has what it takes to turn the bicycle and motoring retailer around. Mr Stapleton blamed mild weather and weak consumer confidence for a lacklustre third-quarter performance, despite insisting that costs have been managed well and that free cash flow remains strong. Even so, 2019 profits are now expected to land between £58m and £62m (compared with brokerage Liberum’s November estimate for £69.5m), while 2020 profits will be flat year on year.
Towards the end of last year, management said it expected "average" winter weather over the Christmas trading period, but this clearly hasn’t come to fruition. And that’s not the only thing that has failed to materialise: the group also lost out on a potential takeover of Evans Cycles when Mike Ashley’s Sports Direct (SPD) bought the bicycle chain out of administration at the end of October 2018.
