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Halfords blames British politics for profit-damaging sales slip

Halfords blames British politics for profit-damaging sales slip
FILE PHOTO: A Halfords sign is seen outside a store in London, Britain April 10, 2016. REUTERS/Stefan Wermuth/File Photo -
Stefan Wermuth(Reuters)
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LONDON (Reuters) – Halfords <HFD.L> warned on Wednesday its 2019-2020 profit would be slightly lower than forecast as British economic and political uncertainty took its toll on sales of more expensive bicycles and in-car technology in recent months.

In May, Halfords reported a fall in 2018-19 pretax profit to 58.8 million pounds and forecast a flat outcome in 2019-20. But on Wednesday it said it was now anticipating an underlying pretax profit of 50-55 million pounds.

Halfords shares were down 3.3% at 0818 GMT, extending year-on-year losses to 53%, after it said that in the first 20 weeks of its first half year like-for-like revenue fell 3.2%.

“Our guidance assumes that we continue to see the weaker customer confidence that we’ve seen over the last three to six months,” Chief Executive Graham Stapleton told Reuters.

Consumers were particularly delaying purchases of adult bicycles costing 200 to 400 pounds, and car technology items of 100 to 300 pounds, Stapleton said.

Industry data published on Tuesday showed British retailers saw their sales flat-line in August as shoppers cut back on non-essentials.

Economists say recent signs of a weakening in spending by households raise the risk of a recession as the country prepares to leave the European Union.

Halfords blamed cooler, wetter weather than the same period last year and weaker consumer confidence for the weaker-than-expected performance. It said the sales fall was partially mitigated by stronger margins and tight cost control.

“We understand that the weather wasn’t ideal, but there are clear structural issues here and root and branch surgery is required,” said analysts at Peel Hunt, reiterating their “sell” stance. They added that Halfords should cut its dividend.

(Reporting by James Davey, editing by Deepa Babington and Alexander Smith)

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