Halfords shares surged 11 per cent to 271p at the market open on Thursday morning, reaching a four-year high after the bicycle and car parts retailer increased its annual profit outlook following strong summer demand.
The FTSE 250 retailer lifted its expected annual pre-tax profits to between £55 million and £65 million, up from its previous forecast of £52.6 million. The morning jump brings Halfords year-to-date share price gains to over 90 per cent.
Halfords reported that an unusually warm summer delivered heightened seasonal demand across its product lines, including motor vehicle air conditioning services. The boost generated an extra £5 million in profits, leading the company to expect its annual financial results to be weighted toward the first half of the year.
In a statement, Halfords said: "Halfords has continued to outperform over recent months. 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."
Garage modernisation and vehicle servicing
The profit update provides support for Halfords as it works to boost sales and manage rising costs across both its retail stores and autocentre garage operations. The group operates across the UK as a major provider of motoring products, cycling equipment, and vehicle maintenance services.
To support growth, Halfords is executing a plan to modernise its garage network. The initiative involves equipping most locations with specialist electric vehicle servicing tools and providing garage staff with digital tablets to assist with vehicle inspections.
Halfords has already modernised more than 100 garages under the program and plans to upgrade another 35 sites during the current year. The company noted that its repair services continued to gain traction, citing Britain's ageing car stock as a key market opportunity for ongoing growth.
The company returned to profit in its previous financial year after recording a 4.8 per cent increase in like-for-like sales.
Market reaction and analyst view
Chris Beauchamp, chief market analyst at trading platform IG, noted that the retailer's recent stock performance was supported by solid underlying fundamentals.
Beauchamp said: "Halfords shares have really climbed in recent months, and today's numbers seem to confirm that this wasn't just due to over-inflated expectations."
He added: "Not only was guidance boosted significantly, but the whole forecast bracket sits above previous expectations. The risk now is that the end of the long hot summer will see appetite for getting out and about start to dim, but a pickup in marketing should help offset that to a degree."
The FTSE 250 index tracks the 101st to 350th largest companies listed on the London Stock Exchange, representing a broad measure of mid-cap UK businesses.
