Halfords Breaks Down as FTSE 100 Motors Towards 8000

Tuesday, May 22: the FTSE 100 continued to rally(+0.23%), albeit at a tepid pace relative to yesterday’s gains(+1.03%) as sterling continued to grind towards year to date lows against the dollar(-1.15%) whilst the converse was true relative to the euro(+1.11% YTD). Asian markets were a mixed bag overnight, ahead of Trump’s meeting with South Korea’s Moon Jae-in to discuss the approach to North Korea ahead of the summit with Kim Jong Un next month. Sterling weakness remained a driver of FTSE 100 equity performance, as investors were encouraged by the abatement of trade tensions but continued to be cautious given Trump’s volatile demeanour and the chance of a U-turn.

Halfords(-11.53%) was one of the higher profile movers on the FTSE 250 after lack of meaningful FY2019 guidance and the likelihood that the weaker pound will nullify earnings hit home with investors. Investors were dismayed by the lack of a margin recovery programme in the face of rising import costs, alongside a requirement for increased investment in customer service, training and marketing which will weigh on profitability in the near term.

Greencore(+5.1%) led the FTSE 250 higher at the open despite swinging to a loss for the first half of fiscal year 2018. The convenience food manufacturer announced a loss of £18.1m($24.3m) for the period, relative to a pretax profit of £11.7m in the prior year period. The loss resulted from an exceptional pretax charge of £53.1m, as profit growth was inhibited by challenges in its US business. However, Greencore reported it has taken a series of significant strategic, network and organisational measures to address the challenges. Management also reported that its U.S. business is now much better positioned to deliver improved performance in the second half of 2018, forecasting strong growth. The company increased its interim dividend to 2.2p per share, from 2.1p for interim period 2016/17.

Across Europe, indices were up at the close with the FTSE 100 +0.23%, the DAX 30 +0.71% and the CAC 40 +0.05%.

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