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Halfords shares crater 20% on brutal day for the UK high street: 'This is the toughest market ever seen'

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Tough conditions: People out shopping on Oxford Street walk past huge January sale signs in London. Photo: Mike Kemp/In Pictures via Getty Images.

Halfords’ (HFD.L) collapsing share price summed up a brutal day for Britain’s retailers on Thursday, as it emerged that Britain’s high street had its toughest Christmas since the financial crisis.

A raft of retailers reported on Christmas trading on Thursday and the majority had bad news for investors. Separate sales figures showed sales across the retail sector fell year-on-year in December.

“This is the toughest retail market anyone’s ever seen,” Richard Hyman, an independent retail analyst, told Yahoo Finance UK.

Halfords was the worst hit. Shares collapsed as much as 24% on Thursday morning after the bike and car retailer warned that profits would be lower than previously forecast after poor Christmas trading. The retailer blamed “exceptionally mild weather and ongoing weak consumer confidence.” Halfords was the worst performer on the FTSE all-share index by mid-morning. 

Sharp fall: Halfords’ stock was down as much as 24% at one point on Thursday morning. Photo: Yahoo Finance UK

Elsewhere in the retail sector:

  • Shares in Card Factory (CARD.L) were down by 11% after it said profits this year would be flat. It blamed “ongoing challenges from the consumer and macro backdrop.”
  • Discount retailer B&M (BME.L) reported a 1.6% fall in like-for-like revenues over the 13 weeks to 29 December.
  • John Lewis said staff may not receive an annual bonus for the first time since 1953. Chairman Sir Charlie Mayfield said profits are expected to be “substantially lower this year.”
  • Marks & Spencer (MKS.L) reported a 2.4% fall in like-for-like clothing and home sales over its Christmas quarter to 29 December, while food sales dropped 2.1%. Group sales fell by 3.9%.
  • Debenhams (DEB.L) sales fell by 3.8% in the six weeks to January 5. Comparable sales in the UK were 3.6% lower than last year due to weak store footfall.

The UK retail sector’s ‘Super Thursday’ largely proved to be a sarcastic moniker,” saidConnor Campbell, an analyst with SpreadEx.

The poor trading figures came at the same time as new data from the British Retail Consortium and KPMG showed that the high street suffered its worst Christmas since 2008. December sales were 0.7% lower than a year earlier.

“In the year before the same month saw an increase of 1.4% and retailers will no be doubt disappointed that there was a similar pick-up amongst shoppers this time out,” said David Cheetham, chief market analyst at XTB.

Consumer confidence is clearly strained’

Traditional retailers are battling with a long-term shift to shopping online. While most are investing in digital, costly staff and rent bills mean many are struggling to compete with more nimble online-only retailers.

However, even online shops are struggling. Asos (ASC.L) shares crashed 40% last month after it warned about a “significant deterioration in sales.” 

The slowdown across retail comes despite rising wages across the UK. Many in the sector believe Brexit is hitting consumer confidence and causing people to save rather than spend.

Consumer confidence is clearly strained,” Neil Wilson, the chief market analyst at, said. “What I think is underestimated is the chilling effect on consumer confidence of house price expectations. People are not fundamentally confident that their house will continue to go up in value and that matters probably more than wages.”

Hyman told Yahoo Finance UK: “The big picture background is there’s too many mouths to feed. We’ve got got too many shops, they’re too big, there are too many websites.”

Christmas is a crucial period for retailers when many of them make the bulk of their annual revenues. The fact that sales fell over the period is a worrying sign for the high street.

Independent retail analyst Nick Bubb told Yahoo Finance UK that the problems highlighted on Thursday were largely stock specific.

Debenhams warning about a potential equity raise, Card Factory warning on 2019/20 costs etc. and Halfords warning about the impact of mild weather,” he said. “Generally speaking, the sector had rallied strongly this week on the view that Christmas wasn’t that bad, so a bit of profit-taking was inevitable, not helped by the gloomy BRC December survey.”

The FTSE 350 General Retail index (^NMX5370) was down o.6%, having been down as much as 1.6% in early trade.