Shares in car parts and bike pedlar Halfords Group PLC (LON:HFD) surged in early deals after an upbeat trading statement.
The shares rose 6.3% to 349.6p after the group reported year-on-year like-for-like (LFL) revenue growth of 2.8% for the 20 weeks to August 17 – the first 20 weeks of the group’s current financial year.
READ: Halfords reports drop in 2018 profits
In the previous financial year, LFL sales grew 2.0%, so the new financial year has seen an acceleration in sales growth.
The cycling business is acting as a bit of a drag on growth, with LFL sales up 0.8% in the current financial year from the same period of last year; however, the group reported that electric bikes are proving increasingly popular.
Go further, get there faster and arrive fresher on an e-bike!
— Halfords (@Halfords_uk) September 2, 2018
You can now trial one for 48 hours for FREE. Find out more here: https://t.co/PaeppUej7B pic.twitter.com/ZPyACcsqHT
The motoring unit delivered LFL sales growth of 3.8% while the autocentres saw LFL sales grow 4.0% from the year before.
The group’s online sales rose 11.3% from the year before.
The retailer’s guidance for the current year is unchanged and it continues to anticipate underlying profit before tax to be broadly in line with the previous financial year.
The group plans to present a strategy update to investment analysts on September 27.
"I am pleased with the trading performance for the first 20 weeks of the year in what continues to be a challenging retail environment. In Retail, sales growth was supported by fitting services, new ranges of workshop and car cleaning products, and electric bikes. In Autocentres, we continued to build momentum on our transformation plan,” said Graham Stapleton, the chief executive of Halfords.
Halfords defying high st woes with group 20 week sales +2.7%
— Louise Cooper (@Louiseaileen70) September 4, 2018
“Electric bikes standout performance”
“Group online sales 11.3%”
Unch guidance for current yr - “PBT broadly in line with FY18”
Liberum Capital Markets responded to what it called “a strong update across all areas of the business” by upgrading the stock to ‘buy’ from ‘hold’ and cranking up the price target to 380p from 360p.
“We are encouraged that guidance has been maintained, further underpinning our confidence in Halfords’ structural position which is not easily disintermediated by competitors,” the broker said.
“Halfords’ strategy update on 27th September provides an opportunity to provide more clarity on the long-term plan and strategic strengths of the business. We do not expect anything radical but further progress in developing IT, systems, with a strong customer service overlay, is likely to feature strongly,” Liberum added.