Halfords lifts full-year profit outlook, shares spark

(Sharecast News) - Halfords shares surged on Wednesday after the motoring and cycling products retailer lifted its full-year profit outlook. The company now expects FY26 underlying pre-tax profit to be around the upper end of the consensus range of £36m to £41.2m as a result of further gross margin expansion and well managed costs, it said.

In a trading update for the year to 3 April, Halfords said group like-for-like sales rose 4.8%, with retail LFL sales up 4.1%. Sales at Autocentres were up 5.8%. Within retail, sales in the motoring segment grew 2.9%, while cycling saw a 6.4% increase.

Halfords said that while the conflict in the Middle East is contributing to an uncertain macroeconomic backdrop, trading in March and April has been as expected and the group is "comfortable" with consensus expectations for FY27 underlying pre-tax profit of £42m to £48.6m.

Chief executive Henry Birch said: "I am pleased to see the positive results that are starting to materialise from the 'optimise' phase of our 'Fit for the Future' strategy as we focus on driving operational excellence and strengthening our foundations for future growth.

"This momentum further underlines the significant potential that exists within the Halfords business, and I look forward to sharing more detail on our progress at our full-year results announcement in June."

At 0918 BST, the shares were up 9.6% at 146.64p.

Dan Coatsworth, head of markets at AJ Bell, said: "It's been a while since Halfords motored on a positive trading update. The company has been running with a flat tyre for some time, with performance lopsided thanks to sluggish cycle sales.

"The nation embraced two wheels during the pandemic, and the cycle boom gave Halfords a massive earnings boost. It was unsustainable and Halfords has struggled with cycling sales ever since... until now.

"Cycling is now a growth engine for the business once again, while the core motoring operations are ticking over nicely.

"The big question is whether this is a fleeting moment or a sign of things to come. The Middle East crisis threatens to keep oil prices higher for longer, which could dampen consumers' ability to spend big.

"Cycling is a discretionary spend and the market is awash with second hand bikes if people were determined for a different set of wheels but were watching their pennies.

"Investors are simply pleased that Halfords is looking more balanced in terms of the different business units' contribution. Right now, they're not worrying about what's around the corner. The here and now is good enough for them."

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