MARKET REPORT: Halfords issues a profit warning as bike demand goes flat

Shares in Halfords slammed into reverse after the cycling and motoring company warned of subdued demand for bikes and tyres.

On a bleak day for investors, it narrowed its profit forecasts, sending shares down 19.1 per cent, or 43.6p, to 185p.

The autocentres division fared well as motorists turned to Halfords mechanics to service their cars and vans. 

This helped revenues rise 13.9 per cent to £873.5million in the six months to September 29 while profits were up 15.8 per cent to £21.3million.

But customers tightened their belts when it came to items such as bikes and tyres.

Car crash: On a bleak day for investors, Halfords narrowed its profit forecasts, sending shares down 19.1%, or 43.6p, to 185p

Halfords warned that such trends could continue and narrowed its annual profit forecasts to £48million to £53million.

Analysts at Peel Hunt remained bullish, however, saying: ‘The downgrades are unfortunate rather than careless, and we urge investors to look at the glass half-full, as we see value here.

‘It may take the consumer perking up for it to emerge, but we are sure it will.’

The FTSE 100 fell 0.4 per cent, or 31.78 points, to 7423.46 while the FTSE 250 was up 0.4 per cent, or 80.58 points, to 18,467.58.

Oil prices rose back above $82 a barrel ahead of today’s Opec+ meeting where the group of oil-producing nations are expected to announce further output cuts.

Rolls-Royce extended its gains a day after it unveiled its ambitious turnaround plans.

Shares rose 2 per cent, or 5.1p, to 263.4p, taking gains so far this year under new boss ‘Turbo’ Tufan Erginbilgic to 185 per cent.

Stock Watch – LifeSafe

LifeSafe, which makes fire extinguishers and detectors, said annual losses will be higher than expected as the costs soared.

The AIM-listed firm has made £5.4million of revenue this year – up 62 per cent on the same period in 2022 but has been hit by increased digital advertising and logistics costs.

It has spent far more than it hoped and said losses this year will be deeper than expected. 

Shares, which floated at 75p in July last year, crashed 43.1 per cent, or 12.5p, to 16.5p.

There was also good news for M&G after Deutsche Bank upgraded the investment group to ‘buy’ from ‘hold’ – but downgraded Aviva amid concerns the company has returned too much cash to shareholders.

M&G rose 2.7 per cent, or 5.6p, to 210.4p while Aviva dropped 2.1 per cent, or 9p, to 415.6p.

Britain’s biggest North Sea producer, Harbour Energy, rose 2.3 per cent, or 5p, to 223.3p maintained its annual guidance and set its sights on making more mergers and acquisitions.

Spirent Communications has signed a £12million deal with a major retail and investment bank to design and install a testing infrastructure.

The group, which tests 5G mobile and wifi networks, has already been paid £9.5million. 

Spirent recently snapped up Netscout, a US test lab automation business, to bolster its operations. Shares gained 5.9 per cent, or 6.4p, to 115.2p.

But Pennon, the owner of South West Water, sank 2.1 per cent, or 16p, to 730.5p after its first-half profits plunged 85 per cent to £3.2mrillion due to higher costs. 

Deliveroo maintained its forecasts for this year but lowered its longer-term growth targets.

The food delivery group rose 1.2 per cent, or 1.7p, to 147p.

Digital 9 Infrastructure came under further pressure after the data centre and wireless network investor this week agreed to sell its stake in Verne Global. Shares plunged 13.5 per cent, or 5.3p, to 34p.

Sales at the vet group CVS rose 11.9 per cent in the four months to the end of October but the stock fell 0.4 per cent, or 5p, to 1493p.

Kelso Group insisted UK listed companies are worth investing in even though many are being bought on the cheap.

It came as the group, which has holdings in THG and The Works, snapped up a 3 per cent stake in the fishing retailer Angling Direct.

Kelso rose 4.1 per cent, or 0.11p, to 2.75p while Angling Direct added 1.3 per cent, or 0.5p, to 40.5p.

Vertu Motors made gains after one of its shareholders, Cinch, raised its stake in the car dealer from 4.15 per cent to 6.07 per cent. Shares climbed 3.2 per cent, or 2.6p, to 84.3p.

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