A warning that a weak pound could have a further impact on profits sends car parts, bicycles and camping equipment retailer Halfords (HFD) 2.1% lower to 327.6p.
In June management said they anticipated taking a £3 million hit in the year to 31 March 2017 on sterling’s depreciation against the dollar.
The board has hedged 75% of imported products paid for in dollars for the financial year at around $1.45. Yet it warns of a further hit to earnings if the dollar/pound exchange if the rate stays below $1.45.
The pound currently trades at $1.32 against the dollar.
Prior to this update, analysts at N+1 Singer estimated that pre-tax profits in the current financial year would dip 1.3% to £80 million. We wouldn't be surprised to see a downgrade to earnings forecasts off that back of today's statement.
The earnings warnings accompanies a first quarter trading update, where like-for-like groupwise sales fell victim to the rain and the timing of Easter to fall 0.6%, year-on-year.
While like-for-like retail sales fell 1.2% in the 13 weeks to 1 July, its Autocentre benefited from longer opening hours and booking more sales online to climb 3.1%.
Bike sales fell 4% during the period but Halfords is pinning its hopes in a recovery over the summer, particularly as the Olympics start in early August. It is stocking bikes designed by Team GB competitors Bradley Wiggins and Laura Trott.
