Halfords reported a 5.9% slump in first-half profits after a poor performance from its cycling arm. Here we round up the analyst reaction:

“While we understand that management wants to invest for the long term here, the expected short- and medium-term sales response is uninspiring. That means material downgrades to outer years today and the pushing back of our expectations of a major cash return.

“While the shares have fallen a long way and the multiple is undemanding, it is hard to see the shares performing in the absence of a turnaround in forecast momentum, something that we think is unlikely.” – Jonathan Pritchard, Peel Hunt


“Today’s interims contain a lengthy strategy review from the new chief executive Jill McDonald, which sounds remarkably like the old strategy, except with a slightly different name: Getting Into Gear has evolved into Moving Up A Gear.

“The big surprise is that there appears to be no reference to store closures. The nub of the message is that Halfords will continue to invest to modernise the business to sustain long-term growth and full-year profit in 2017 is expected to be broadly unchanged on the full-year to 2016, “with growth thereafter”, although the target is to grow the dividend every year.

“First-half underlying profit before tax was down by around 6%, in line with expectations after disappointing trading in the second quarter.” – Nick Bubb, independent analyst

“The question of blip or trend with regard to cycling’s weaker second-quarter performance will only be answered in the fullness of time and delivered results. In the absence of a definitive answer on this sentiment driver, the company’s plans on other fronts, most notably but not exclusively, sales growth and cash utilisation, remain the most important factors.

“Management has laid out its ambitions for growth and plans for a sustainable debt level, with presumably any excess returned to shareholders via dividends or other mechanism. We welcome these objectives, while recognising that the market is likely to react negatively to the profit growth intermission. And as with the original strategy, the market’s initial view will be that the proof of the pudding will be in the eating.

“We are placing our forecasts, recommendation and target price under review, while digesting the details of the new strategy.” – David Jeary, Canaccord Genuity

“Overall, this represents a below par set of results for Halfords, that has seen its positive momentum under its Getting into Gear transformation witness a slowdown. However, the retailer must be praised for its proactivity and today’s announcement of its latest Moving Up a Gear programme indicates that Halfords has a sustainable strategy in place aiming to overcome its slowdown in performance.

“Major challenges for Halfords will be to manage the threat of competitors such as Sports Direct and the bike specialists, such as Wiggle, on the retail side, while ensuring seasonality of the weather has less of an effect on sales going forward. Halfords will also be hoping it records a strong Christmas performance, with this trading period often having an impact on performance in the following year.” – Greg Bromley, Consultant at Conlumino

“The return to cycling growth in September is encouraging, although further improvement is important to reassure that growth is sustainable. Continued strong car maintenance growth in the second quarter is also encouraging going into the key second-half period.

The guidance to flat full-year profits in 2017 is clearly disappointing. While the new strategy announced appears sensible, today’s presentation by the new chief executive is crucial.” – Adam Tomlinson, Liberum