// Halfords facing tough trading conditions despite focus on motoring sales
// Broker Panmure halves target share price amid concerns retailer exposed to downturn
A major broker has warned that bike to motoring retailer Halfords is facing tough challenges amid the cost of living crisis.
Shares in Halfords have tumbled amid warnings over its exposure to economic headwinds and broker Panmure Gordon said the cycling and motoring group was “naturally at some risk”.
The broker lowered the stock’s rating to ‘hold’ from ‘buy’ and slashed the target price to 150p from 300p. Shares slumped yesterday and are currently valued at around 125p in early morning trading.
In response to tightening consumer spending, Halfords has shifted its business towards motoring, which accounts for around 70% of the group’s revenues and includes MOTs, servicing and breakdown cover services.
READ MORE: Halfords drops prices & launches new initiatives to ease cost-of-living crisis for motorists
However, Panmure warned that Halfords’ retail division – including the sale of bikes, scooters and accessories such as helmets, lights and locks – was now “exposed” to the economic downturn.
Panmure told clients: “Halfords is naturally at some risk coming into the period of significantly increased pressure on consumer spending in 2022. We support much of the current strategy but we feel focus mainly on the AutoCentres business has left the retail division somewhat exposed in the current environment.”
Halfords has 400 stores in the UK and is planning to update the market on 7 September.
Panmure analysts added: “We believe that there is significant upside in Halfords and that it is unlikely to go bust, however harsh the coming winter is for UK retailers. But we prefer to wait for better visibility.”
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