Halfords shares rise as profits double

Halfords shares (LON: HFD) surged on Wednesday’s opening bell after the group released a strong trading update for the 26 weeks to 2 October 2020.

The group posted a 101% rise in pre-tax profit in the first half of the year to £56m, as the group saw strong demand amid the lockdown cycling boom.

like-for-like revenue at the group grew by 6.7% from £582.7m to £638.9m whilst like-for-like sales in the cycling department jumped 54.4%.

As people took up cycling over lockdown, the number of people in cars fell. Halfords reported a 23.7% fall in motoring revenue.

“We are very pleased to have achieved such a strong first half performance against the backdrop of one of the most challenging trading environments in recent history,” said Graham Stapleton, the group’s chief executive.

“We have worked hard to capitalise on the cycling market tailwinds by sourcing more stock from existing and new suppliers, as well as launching new products and brands to serve the high level of demand for our cycling products and services. Despite the headwinds we have seen in motoring, with UK traffic 30% lower than pre-Covid-19 levels and the impact of the MOT deferment, our ‘Road Ready’ campaign and the investments we have made in our motoring services business have enabled us to increase market share and grow the business in Q2.

“As a sign of our confidence in the long-term prospects of our motoring business, and in order to meet the growing demand for our services in this area, we are in the process of recruiting to fill a wide range of service-oriented roles across our stores, Autocentres and fleet of Halfords Mobile Expert vans. We are also making a substantial investment in further training for existing colleagues, including in the rapidly growing area of electric vehicle servicing as we work to fill the skills gap that exists in the UK. We will be training 100 more electric car technicians next year, bringing the total to 470. In addition, we will be growing the number of e-bike and e-scooter servicers in our stores from 400 to over 1,800. This means that, by April, each of Halfords’ garages will have at least one electric car technician, with electric bike and scooter services in every store,” Stapleton added.

The group remains cautious about its outlook amid further lockdowns and a seasonal dip in cycling sales over winter. Given the uncertainty around trading, the FTSE 250 retailer has not given profit guidance for FY21.

Halfords shares (LON: HFD) are +7.40% at 281,92 (0914GMT).

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Safiya Bashir
Safiya focuses on business and political stories for UK Investor Magazine. Her interests include international development, travel and politics.