Broker snap: Halfords' update 'a mixed bag'

7th Apr 2011 11:09

Peel Hunt cuts forecasts at Halfords after the car and bike parts retailer provided disappointing outlook for 2012. The fourth quarter statement was a mixed bag, according to the broker, who noted an overall like-for-like (LfL) sales decline of 6.8%, despite "an unexpected recovery" in bike sales.The group confirmed that 2011 pre-tax profit is expected to be in the £124-127m range, compared with Peel Hunt and consensus expectations of £127m. For 2012, gross margin is estimated to fall by at least 30 basis points, with net cost growth after savings of around 4%.While strong cash generation and a £75m buyback will provide support, the broker cuts its target price by 11% from 450p to 400p to reflect new guidance, and retains its 'hold' rating.---bc