Must read: European markets, Puma, Halfords

GLOBAL MARKETS

Markets are treading water in Europe today amid a lower-than-normal volume day. The Autumn Budget was on the whole well received by UK markets, evidenced by a stronger pound and lower gilt yields, reflecting the chancellor’s smorgasbord of tax increases to tackle the fiscal black hole.

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Meanwhile, US markets are closed today for Thanksgiving after the S&P 500 logged its fourth straight day of gains fuelled by growing expectations of a Fed rate cut in December.

PUMA

Anta Sports Products is reportedly exploring a possible takeover of Puma. According to Bloomberg, the Hong Kong listed company has been evaluating a bid for the German athletic brand. It also said there could be other potential bidders including Li Ning Co in China and Asics in Japan.

There appears to be no shortage of suitors for Puma which increases the likelihood that a takeover materialises. Clearly, Anta Sports is looking to capitalise on Puma’s depressed share price, striking while the iron’s hot at a time when the company’s shares are clearly in a vulnerable position.

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Shares have shed almost two-thirds of their value this year as the brand struggles to chime with consumers. It has battled with weak demand from its biggest markets, US trade tariff uncertainty and declining sales. Last month, it announced plans to cut 900 corporate jobs and reduce its reliance on discounting as it tries to revive the business.

Takeover speculation this morning has provided rocket fuel for Puma’s share price with the stock soaring over 13% in Frankfurt, on track for its best session since September.

HALFORDS

Halfords Group (LSE:HFD) reported half-year underlying profit before tax up 1% to £21.2 million and said it is on track to deliver full-year underlying profit before tax in line with consensus. Revenues increased by 3.3% to £893.3 million and on a like-for-like basis, group sales grew by 4.1% with a strong performance in cycling up 9%. Full year capital expenditure is expected to be within the guided range of £60 million to £70 million and Halfords said cost savings are on track. After nine years as Chair, Keith Williams will step down by September next year.

There has clearly been a boom in cycling in recent years from commuters look to circumvent traffic in busy cities and on the back of increased environmental and health consciousness. A soaring supply of ride hailing bikes and the rise in cycling fashion brands like Rapha have also pushed consumers more towards cycling as a pastime, particularly with the help of social media. This shift has supported Halfords and allowed the business to enjoy continued strong growth in its cycling segment which outperformed.

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Its autocentres revenue also delivered strong growth up 4.3% on a like-for-like basis thanks to its fusion strategy which aims to bring both retail and workshop operations under one roof across various locations to optimise the customer experience.

Shares in Halfords are trading modestly lower today, in line with the cautious broader market mood. Nonetheless, analysts remain optimistic towards the company with a consensus buy recommendation on the stock.