- Home |
- Request a Brochure |
- Open An Account |
- Demo Account |
- Prime Markets |
- Careers |
- Contact Us |
Risk Warning
07/10/2010
Bike retailer Halfords has finally come clean about the extent of its distribution problems that hit store deliveries, and also admitted it has been stocking the wrong kind of bikes.
Investors took fright at Halfords’ dismal second-quarter trading update, which saw underlying sales slump 4.1 per cent, sending shares tumbling 9 per cent.
The firm admitted as much as 1.4 per cent of this fall was due to disruption to supplies from its new distribution centre in Coventry, first disclosed by the Mail in August.
But the gloom deepened yesterday as Halfords chief David Wild also admitted the chain, which is the UK’s largest bicycle retailer, had been stocking the wrong bikes.
Consumer trends have shifted from mountain bikes to road bikes. Wild explained: ‘We have seen a shift away from mountain bikes – where we have had the vast majority of sales – to road bikes and town and trail bikes. What we have been struggling to do is to keep up with that shift.
More...Halfords share price information and news
‘We are now taking steps to re-align our range and pricing of cycles to more accurately reflect current consumer needs and tastes.’
Wild also confirmed the problems with its new distribution centre, saying: ‘In the past few months [Halfords has] successfully addressed a number of company issues such as the reconfiguration of our warehousing and distribution infrastructure.’
The warehouse was supposed to save Halfords (down 39p to 408p) £4million a year and create up to 300 new jobs.
But teething problems meant stores across the country were not receiving full deliveries, with some stores reporting just half their stock arriving.
Ramona Tipnis, analyst at broker Shore Capital, said: ‘The statement from Halfords is disappointing. There has been a clear impact from the disruption of the move to the Coventry DC (distribution centre).’
The setback was made all the more embarrassing because operations and logistics director Andy Torrance had previously said of the new facility: ‘We are putting a lot of time, effort and resources into testing. It is vital that it does exactly what it should from day one.’
Wild may have been busy revamping the business, but City watchers are concerned the wheels may have come off the turnaround.
Richard Curr, head of dealing at Prime Markets, said: ‘In early 2010, the markets were largely euphoric over the prospects for Halfords as a retail recovery play. Now the lustre seems to be fading fast.’
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.