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MARKET REPORT: Halfords feels the pinch as bike sales punctured

Halfords reported profits of £29m for the six months to the end of September - just half the amount it made in the same period last year

Shares of Halfords reversed after warning profits would be hit by higher costs and lower spending on bikes by customers feeling the pinch.

The bike and car retailer reported profits of £29million for the six months to the end of September, half what it made in the same period last year.

As such, he warned full-year profits would be at the low end of his £65-75m range.

Halfords reported profits of £29m for the six months to the end of September - just half the amount it made in the same period last year

Halfords reported profits of £29m for the six months to the end of September – just half the amount it made in the same period last year

The shares fell 7.3%, or 15.5p, to 198.1p. The fall in profit came despite a 10.2% rise in half-year revenue to £765.7m.

But while revenue from its auto centers – specializing in car servicing, technical checks and repairs – jumped 70% to £265.2million, retail saw a 7.1 drop. % to £500.5 million.

Within its retail arm, sales of automotive products, from windshield wipers to motor oil, fell 2.4%. But cycling revenue fell nearly 12% due to lower demand for bikes and bike parts.

While sales in the cycling division have cooled after a boom during the pandemic, the group is now focused on building its revenue stream through bike and car maintenance.

Sales related to services represent 42.6% of the group’s revenues and should reach more than 50% next year after the acquisition of tire retailer Lodge Tyre.

The FTSE 100 rose 0.17%, or 12.4 points, to 7465.24 and the FTSE 250 gained 0.4%, or 78.13 points, to 19,500.50.

The proposed merger between two of the country’s biggest newspaper publishers has been scrapped as the owner of The Scotsman decided not to bid for its biggest rival Reach, owner of the Mirror and the Express.

Stock Watch – Alliance Pharma

The boss of Alliance Pharma will resign temporarily for personal reasons.

Peter Butterfield, who became chief executive in 2018, will be replaced by finance boss Andrew Franklin before returning in January.

The healthcare group, whose products range from lotions and mouthwashes to tablets, has suffered another blow after several expected orders failed in the last three months of the year.

The shares plunged 42%, or 25.6p, to 35.3p.

National World – led by media mogul David Montgomery – said “circumstances do not align” after saying it was considering a potential bid for its biggest rival three weeks ago.

The deal would have brought together two major local and regional newspaper publishers in the UK.

Reach, formerly known as Mirror Group, has over 130 titles across the UK.

They include the Liverpool Echo, the Daily Record, the Manchester Evening News, the Star and OK! Magazine, as well as many other local publications.

National World, owner of the Yorkshire Post, said there would have been “considerable industrial and financial advantages in combining the newspaper portfolios of the two companies”, but concluded that the circumstances were not right.

Reach shares gained 2.6%, or 2.9p, to 113.4p, but National World lost 2.5%, or 0.5p, to 19.25p.

Boohoo has been forced to respond to allegations of poor working conditions at its Burnley site following newspaper reports.

The fast fashion brand said making sure “people are safe and comfortable in their workplace is our top priority”. The shares fell 1.1%, or 0.43p, to 38.38p.

Britvic rose 2%, or 15.5p, to 784.5p as it benefited from higher sales and profits following warmer weather and the easing of Covid restrictions.

The drinks maker behind Robinsons, Lipton iced tea and Fruit Shoot saw revenue jump 15.5% to £1.62billion in September. Profit soared 45.3% to £140.2m in the period.

Johnson Matthey has received a boost from investors after the chemicals group revealed how it would save money by streamlining the business.

Around 15% of senior roles will be cut to cut costs by £150m. The shares gained 3.5%, or 72p, to 2105p.

Yarn maker Coats saw sales rise 6% in the four months to October, beating the 5% expected by analysts.

Coats reported currency headwinds of 5% versus 3%-4% in the previous update. The shares slipped 0.7%, or 0.5p, to 68p.

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