Halfords lifts profit targets on heatwave boost
The sun has shone on Halfords’ summer trading as the motoring and cycling retailer lifted its profit targets in response to “very strong” recent sales.
The FTSE 250 firm had previously been tipped for a £52.6m pre-tax profit this year but said on Thursday that it now hopes to make between £55m and £65m. Shares in Halfords roared on Thursday morning, gaining 11 per cent to 269p.
In an unscheduled update to investors, the group said it has “outperformed” in recent months due to higher-than-expected sales in its summer ranges.
“This reflects momentum in the underlying business as we continue to deliver against our strategic priorities alongside a very strong performance in seasonal categories, in part reflecting unusually warm summer weather,” Halfords said on Thursday.
Higher demand for seasonal products alone has boosted the retailers profit by millions of pounds, it estimated.
The group is best-known for selling bikes and offering cycle and motoring repair services but also sells assorted seasonal goods like camping and barbecue gear.
Analysts at RBC Capital Markets said that the retailer’s cycling, camping and air conditioning ranges were likely behind this summer trading boost.
Halfords will invest some of this extra cash into its tech and marketing departments, it said, meaning that its full-year performance will be weighted towards the first half.
‘Early signs’ of turnaround progress
The retailer’s share price had been in steady decline since 2021, after it failed to replicate its huge boost in pandemic-era sales as bored Brits flocked to cycling.
Last April, former chief executive Graham Stapleton announced his sudden departure after seven years at the helm. He was replaced by former Very boss Henry Birch, who has led a rapid expansion of the group’s network of garages.
In June, shares in Halfords leapt 14 per cent after it smashed analyst expectations to turn a £44m pre-tax profit, reversing the previous year’s £30m loss.
“Halfords has a strong market position in the UK motoring and cycling markets, with a good offer in both the retail and services sectors. We are encouraged by a more resilient performance from the motoring and cycling markets,” analysts at RBC said.
“We are encouraged by the early signs of progress from Halfords’ ‘Fit for the Future’ plan, but we do note ongoing macroeconomic and political uncertainty which may weigh on the more discretionary areas of [Halfords’] offer,” they added.