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Halfords warns on profit as it steps up investment

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Halfords warns on profit as it steps up investment
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LONDON (Reuters) – British bicycles to car parts retailer Halfords <HFD.L> warned on Tuesday that profit would be flat in its current year, held back by a lack of price rises in cycling, currency and a step-up in investment in the business.

For the year to March 30, Halfords made an underlying pretax profit of 71.6 million pounds – in line with analysts’ forecasts but down from 75.4 million pounds in 2016-17. Turnover rose 3.7 percent to 1.14 billion pounds.

The results are the first presented by Graham Stapleton, the former Dixons Carphone <DC.L> executive who succeeded Jill McDonald as Halfords CEO in January. McDonald went to Marks & Spencer <MKS.L> to lead their clothing business.

Halfords said it anticipated the motoring market would remain robust in the 2018-19 year, and it continued to see good growth prospects for cycling although it did not expect prices to rise this year as in the previous year.

“Given this, the phasing of our remaining foreign exchange mitigation actions and decisions to accelerate investment in services and customer capabilities, we currently anticipate FY19 underlying profit before tax to be broadly in line with FY18,” it said.

Prior to Tuesday’s update analysts’ average forecast was an increase to 76.5 million pounds.

Shares in Halfords, up 11 percent so far this year, closed Monday at 388 pence, valuing the business at 775 million pounds.

Halfords also named Keith Williams as its new chairman from July 24. Williams, a former CEO and chairman of British Airways, will succeed Dennis Millard who is retiring after nine years in the job.

(Reporting by James Davey, Editing by Paul Sandle)

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