Car parts, bikes and tyres seller Halfords (HFD) has let investors down again. The retailer’s latest profit warning (28 February) pinned on weakening demand for bicycles as well as wet weather, which has deterred customers from visiting its stores and purchasing winter and car cleaning products in the fourth quarter.

Halfords now expects to deliver pre-tax profit in the £35 million to £40 million range for the year ending 29 March 2024, well below its previous £48 million to £53 million forecast and implying a 25% cut to guidance at the mid-point of the range. Following the downgrade, shares in the Worcestershire-based retailer have reversed 22% over one year and deflated by 35% over five years.

The company bemoaned a ‘further material weakening’ in its cycling, retail motoring and consumer tyres markets in Q4, although the Autocentres arm continues to deliver good growth. Halfords remains ‘cautious on market recovery in the short-term’, which means pre-tax profit for the year to March 2025 is expected to be as flat as a punctured tyre.

Liberum Capital said Halfords’ board ‘could now come under increasing pressure to sell the business, but potentially at a much lower price than recent months’ bid speculation’. Last year, Halfords was the subject of market whispers about a takeover approach from Redde Northgate (REDD) which came to nothing, but a resurrection of profit warnings could be a catalyst for shareholders to push for changes including new ownership. 

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