HALFORDS' shares jumped nearly 12 per cent in early morning trading after the company posted better than expected first quarter sales, boosted by demand for its cycling range and a solid performance from its car maintenance division.
The FTSE 250 group, which trades from around 470 stores in the UK and Ireland and around 290 Halfords Autocentres, said sales at Halfords stores open over a year grew 8.8 per cent in the 13 weeks to 28 June.
Total retail sales rose nine per cent, helped by the drier weather compared to a year ago. Sales as its smaller Autocentres division rose 7.8 per cent although on a like-for-like basis they were down 0.9 per cent.
"Our retail performance reflected better trading execution in areas of opportunity whilst we were up against a weak comparative period,” Halfords chief executive Matt Davis said.
Online retail sales jumped 15.5 per cent, with cycling making up over half of revenues.
Davis, who joined the company late last year, unveiled a three-year turnaround plan in May to reach £1bn sales by 2016. This compares with £871m in sales last year.
As part of the plan, called Getting into Gear 2016, Davis said around £50m will be spent on revamping 150 stores with larger cycle areas selling clothing and accessories.
Halfords is already the UK’s largest bike retailer, selling more than 190 models including Pinarello – the same brand used by Bradley Wiggins – and ranges designed with Chris Boardman and Victoria Pendleton.
But it has a smaller share in the fast-growing cycle parts, accessories and clothing market, where it competes with independent shops and specialists such as Evans and online retailer Wiggle.
The group will also invest in staff training, improving customer service and also launching a new website by the end of the year.
To fund the revamp, Halfords slashed its dividend by a third and has warned profit will not get back to 2013 levels of £72m until 2016.