Halfords is stuck in reverse gear and Dunelm is still on top form

“Boris Johnson’s Commons vote defeat put a new lease of life into the pound, sending the UK currency up 0.55% against the dollar at $1.2152 and up 0.35% against the euro at €1.1051. The FTSE 250 was a key beneficiary with UK retailers Dunelm, B&M and Dixons Carphone among the biggest risers on the mid-cap index,” says Russ Mould, Investment Director at AJ Bell.

“The FTSE 100 also marched forward with a 0.7% gain to 7,319. Investors were attracted to UK stocks that had recently gone through a very tough patch including Prudential, Marks & Spencer and International Consolidated Airlines."

Halfords

“Halfords is going from bad to worse with yet another profit warning. The company is blaming the weather and weaker consumer backdrop but if you read the reviews of Halfords online it would seem the retailer has a big problem with in-store stock availability, staff who aren’t very helpful to customers and delays with online orders reaching stores for collection.

“Halfords used to be the go-to place for car parts and bikes but customers who have a bad experience will simply vote with their feet and go elsewhere. Is the company now paying the price with its falling sales?

“If the company wants to pin its fortunes on being a service-led business it seems there is a lot more work to be done to improve standards.

“For now, it sits among the group of struggling retailers battling a decline in revenue and profit.

“Interestingly its share price went up on the latest trading update. One could argue that the share price has already been beaten up and so expectations were already low. But that could be a dead cat bounce unless the company’s eternal optimism can actually feed through into higher earnings.”

Dunelm

“In stark contrast to many other retailers, Dunelm doesn’t need to search for excuses to explain its performance as everything seems to be going swimmingly. It appears to know how to do retailing well; give customers what they want and do everything you can to make their shopping experience enjoyable.

“But why is it doing so well when others aren’t? One can speculate that a slowdown in the housing market has prompted many people to rethink plans to move home and instead do up their existing property – thus creating a reason to visit Dunelm’s stores or shop on its website.

“Dunelm itself suggests it is doing well because people now think of the brand for a broader range of items than the historic association with quilts and curtains. Also benefiting its cause is a predominantly value pricing model, making its goods affordable to a large market.”

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