Thursday 1 October 2020 9:09 am

Halfords shares surge a fifth as wheels keep turning

Shares in Halfords jumped over 20 per cent this morning as the firm said that the continuing numbers of new people taking to two wheels meant its half year profit would be higher than previously forecast.

The FTSE 250 firm, which sells motoring and cycling products and services, said that profit was now expected to be over £55m, up from the £35-40m previously forecast.

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Over the last six months the UK has seen a boom in cycling as local authorities urged people to avoid public transport amid the coronavirus pandemic.

Although the peak cycling “season” has come to an end as the afternoons begin to shorten, Halfords said that year-on-year sales growth in September stood at 22 per cent.

This was driven by an especially strong performance in its cycling division, which saw a 46 per cent like-for-like increase across the five-week period.

However, the firm warned that it was “cautious” over its outlook for the second half due to the recent surge in coronavirus cases.

“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”, the group said in a statement.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Halfords’ sales have continued to motor despite the end of the summer holidays.

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“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.”