Market Report: Weather puts spoke in Halfords hopes
The Tour de France may be in full flow, but that didn't stop Halfords ending up at the back of the pack yesterday. The bike seller came close to finishing at its lowest-ever share price last night as fears continued to grow that the recent terrible weather means its upcoming update could be a shocker.
Bicycles and tents don't tend to be much in demand when the rain is pouring do, so the fact that last month was the wettest June on record does not exactly bode well for the group's first-quarter statement in a fortnight.
Yesterday, Kate Calvert from Seymour Pierce added to the gloom by drastically lowering her expectations. The scribbler cut her pre-tax profit forecast for the year by 15 per cent, warning she did "not expect pretty first-quarter sales numbers" and saying that, as well as the torrid weather, Halfords was also being hit by rivals' discounting.
In addition, analysts from Barclays were not helping by claiming Halfords – along with high street institution Marks & Spencer, 1.8p worse off at 329.2p – would be "severely affected" by the soggy conditions, although they added that a very disappointing update was "already in the price".
Ms Calvert did provide some glimmer of hope. Fears have been raised recently over the future of the company's dividend, but she was unconcerned, saying its cashflow was strong enough to sustain it.
Nonetheless, Halfords ended up being pegged back 20.4p to 208p – its lowest since 2008. This was partly thanks to the stock trading ex-dividend, although given this accounted for around 14p of the fall it would have still finished deep in the red.
A three-day rally for the FTSE 100 came to an end as the top-tier index moved back from a two-month high, edging down 3.26 points to 5,684.47. With Wall Street enjoying a day off for Independence Day, volumes were light so traders were free to watch Bob Diamond's grilling by MPs as Barclays dipped 1.05p to 166p.
GKN advanced 3p to 186.6p amid talk the engineer could wrap up the acquisition of Volvo's aircraft business this month. The Swedish giant revealed back in November that discussions with possible buyers had started, with GKN emerging as the favourite to win the race in March.
Slash your prices, was the advice being given to Tesco boss Philip Clarke. Having examined industry data, the analysts at ING revealed that shopping at the supermarket has actually got relatively more expensive compared to the rest of the market since its profit warning in January.
They were particularly concerned over the gap being built up between the UK's largest grocer and its "biggest threat", Asda, saying "deeper price cuts are the only way to prevent Tesco customers from switching". With the scribblers – who warned the food retail industry as a whole was "increasingly unattractive" – deciding it was time to sell its shares, the group slipped 3.8p to 315.95p, while rival Morrisons moved down 2.2p to 268.4p after its rating was downgraded to "hold" from "buy".
Takeover chatter around Phoenix was given another airing. After bid talks with CVC Capital Partners fell apart earlier in the year, Berenberg's Matthew Preston said that either the insurer will refinance its debt or it would "once again step into the limelight as a … target". Either way, he raised his advice to "buy" as Phoenix was lifted 13.4p to 489.3p on the FTSE 250.
Anyone hoping Man Group's recent relegation from the Footsie would spark a turnaround in the hedge fund giant's share price will have to think again. It was knocked back to its lowest since early 2000, falling 3.3p to 67.55p, after JP Morgan cut its target price by more than 50 per cent to 45p, with the broker saying there was "no reason to believe Man is 'cheap' despite the share price decline".
Tiddler Travelzest flew up 0.62p to 5.75p after the release of its interim results. The tour operator and owner of the UK's largest nudist holiday business is up for sale and announced the list of potential bidders, which include its chief executive and finance boss, had been cut down to a "small number of preferred parties".
Meanwhile, African Minerals' appointment of Keith Calder – a former big-wig at Rio Tinto (down 14.5p to 3,142.5p) – as its new boss got the thumbs up, as the iron ore producer jumped 32.75p to 367.75p.
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