Halfords hit by Focus collapse
BICYCLE and car parts retailer Halfords is facing a £7.5m charge following the collapse of the Focus DIY group, it admitted yesterday.
The charge stems from lease guarantee made by Halfords when it and Payless DIY – now part of Focus – were part of the same group.
Halfords said the non-recurring expense would be included in its results for the year ended 1 April 2011.
“This non-recurring expense relates to the creation of a provision for the potential liabilities arising from guarantees provided by Halfords prior to July 1989,” it said in a statement.
“An estimate of the potential liability relating to these guarantees was previously disclosed as a contingent liability. The guarantees were provided to landlords of properties leased by Payless DIY (now part of Focus DIY) when both Halfords and Payless DIY were under the ownership of the Ward White Group.
“It is anticipated that the cash outflow relating to the guarantees will be incurred over the next three years.
“The group is taking mitigating actions to reduce these liabilities.”
The shares fell a few pence to 393p and Arden’s retail analysts said he was looking for a 400p price target after the news.