Halfords shares (LON: HFD) have surged over 20% on Thursday morning after the group raised its profit forecast.
Thanks to the recent boom in cycling, the group has raised profit forecast from £35-40m to over £55m.
Halfords’ cycling division saw a 46% growth in the five weeks to 25 September 2020, which reflected “the strength of our unique proposition and continual improvement in supply to meet unprecedented levels of demand.”
In the same five-week period, the motoring division grew by a modest 7.5%.
The group, however, is remaining “cautious” over the second half of the year due to the growing number of Coronavirus cases. It said in a statement:
“The potential impact of second waves of COVID-19 now seems more pronounced than just a few weeks ago, and the economic impact of an end to the furlough scheme and the outcome of Brexit negotiations remains very uncertain. We are well placed to address any headwinds we may face and capitalise on the tailwinds as they arise. Our balance sheet and liquidity position remain strong.”
Interim results will be reported on 18 November 2020.
Commenting on Halfords’ raising profit forecast, equity analyst at Hargreaves Lansdown, Nicholas Hyett, said: “Halfords’ sales have continued to motor despite the end of the summer holidays.
“The continued strength in cycling stands out, probably reflecting the public’s reluctance to get back on public transport and government restrictions on other forms of exercise.
“Some caution about what the future holds is only natural given both the pandemic and Brexit continue to loom large over the UK economy, however we think the group is demonstrating that it has what it takes to survive the car crash engulfing much of the retail sector.”
Halfords shares (LON: HFD) are currently trading 18.92% at 215,72 (1008GMT).