Halfords slashes profit forecasts as cost of living crisis deters customers from replacing tyres
THE wheels came off Halfords today — one of three companies to disappoint with a profit warning.
The bike and garages chain lost over a quarter of its value after spooking the City, while Cillit Bang-maker Reckitt and asset manager ST James’s Place suffered slumps.
Halfords’ valuation was knocked back to £322million after it said the cost of living crisis was deterring drivers from replacing tyres or servicing their cars.
Squeezed budgets have also depressed bike sales by 8 per cent, with more people buying on credit, which has weakened Halfords’ profit margins.
The company now expects profits to be between £35million and £40million, rather than the projected £48million to £53million range.
Last year it rejected a £1.4billion merger proposal from van leasing firm Redde Northgate but its valuation could spark a fresh approach.
Elsewhere, shares flopped by almost 10 per cent for Durex and Dettol’s maker Reckitt after its results fell short of projections.
Analysts had hoped the FTSE 100 firm would see another sales lift but it reported a 1.2 per cent dip as consumers switched to supermarket own-brands.
Reckitt also revealed a £55million hit to its annual sales because of staff in the Middle East under-reporting liabilities.
RBC analysts said the blow meant Reckitt’s results “were really grim rather than just poor”.
And almost £1billion was wiped off St James’s Place after it set aside £426million to settle claims that it had overcharged clients for advice.
Shares in the wealth manager tumbled by as much as 30 per cent before closing down 115.20p — 18.5 per cent — to 505.8p.
The firm said it had to take the multimillion-pound hit “for potential client refunds”.
In October it said that it would overhaul its fees after the regulator raised concerns. The firm reported a £9.9million loss and said it would lower dividend payments.
Boss Mark FitzPatrick admitted it was a “disappointing outcome for everyone”.
Analysts at Numis criticised the firm for not dealing with the issues “comprehensively” and said it was another “piecemeal warning” from the business.
BITCOIN'S HIGH RISE
BITCOIN’S rally continues, as the world’s best-known cryptocurrency has risen above $62,000 (£49,000) for the first time in two years.
The digital coin has risen in value by a fifth this week, fuelled by the launch of exchange-traded funds. That has brought in a new pool of buyers as digital coins are now accessible to institutional investors.
The last time Bitcoin was this high, investors lost over $2trillion (£1.6trillion) as the market went into meltdown shortly after.
JUST EAT’S BIG AD TAKE AWAY
TAKEAWAY giant Just Eat spends almost double its entire earnings on its blowout marketing budget, its latest accounts show.
The firm, which launched a campaign with singer Christina Aguilera last year after previously using Katy Perry and Snoop Dogg, spent £503million on marketing expenses last year in contrast to its £277million adjusted earnings. It made a £1.7billion annual pre-tax loss.
Its UK profits leapt fivefold to £115million. Brits placed 246million orders last year, 6 per cent down on the previous year, but with customers paying more for their takeaways.
NEW HOMES CUT
BUILDER Taylor Wimpey has said it will construct fewer homes this year, days after the competition watchdog said it was investigating eight housebuilders for colluding to limit supply and push up prices.
The firm said that it would “co-operate fully”. Boss Jennie Daly has also called the planning regime “challenging”.
It posted a 42 per cent drop in profits to £473.8million and completed a quarter fewer homes at 10,848.
But it said there were “signs of improvement”.
A DIRECT SNUB TO BUY BID
INSURER Direct Line has become the latest British company to bat away an opportunistic foreign suitor, rejecting a £3.1billion bid.
The firm, which also owns the Churchill brand, confirmed that it had received a 233p-a-share bid from Belgian rival Ageas.
Direct Line said that it had rejected the “unattractive” and “highly opportunistic” proposal and claimed it “significantly undervalued” the business.
Nonetheless, shares in Direct Line bounced yesterday by the biggest amount ever, up by 39p, or 24 per cent, to 202.7p.
The company is waiting for new boss Adam Winslow to arrive next month and said he was tasked with “refreshing the strategy and operational focus” of the business.
Penny James was let go last year after scrapping its dividend amid tumbling profits.
KLARNA LOSS NO5
BUY-now-pay-later company Klarna has posted its fifth annual loss in a row as the firm gears up for a potential £15billion New York listing.
Klarna reported losses of £190million, an improvement on the previous year’s £800million loss. Meanwhile revenues rose by more than a fifth to £1.79billion while boss Sebastian Siemiatkowski said it continues “on our journey to long-term profitability”.
Klarna has 150million customers but critics argue that it encourages users to buy things they cannot afford.
BRAKE ON ASTON E.V
LUXURY carmaker Aston Martin has said it will delay its electric vehicle production until 2026, while it focuses on its turnaround plan.
The UK increased production of electric and hybrid vehicles by 4.5 per cent last month but the majority were exported, the Society of Motor Manufacturers and Traders reported.
British carmaking is revving up, with a 21 per cent jump in production of 82,997 cars in January, the trade body added.