Shares in Halfords Group PLC (LSE:HFD) rose 13% to 203.76p after the motoring and cycling retailer reported underlying profit ahead of expectations and its highest gross margin in a decade.
Group sales grew 4.8% on a like-for-like basis in the 53-week period to 3 April 2026, with retail up 4.1% and the Autocentres servicing business up 5.8%.
Gross margin expanded by 210 basis points to 52.8%, its highest level in ten years, more than offsetting an anticipated rise in operating costs.
Underlying profit before tax increased 4.1% to £45.4 million on a comparable 52-week basis, reflecting a change in the accounting treatment of acquired intangibles.
Stripping out that change, underlying profit grew by more than 8% to £41.5 million.
The company credited the improvement to the "Optimise" phase of its Fit for the Future strategy, which is designed to build near-term value through disciplined execution.
In Autocentres, operating margin rose 50 basis points as the company rolled out its Fusion garage concept and drove labour efficiencies.
In retail, it laid the groundwork for a new approach to category management, reviewing pricing and promotions and launching in-store trials.
The board recommended a final dividend of 6 pence, lifting the total for the year by 0.2 pence to 9 pence.
Halfords said trading in April, May and June had been strong, and it now expects underlying profit for the current year to come in around the top of the consensus range.
The company has not yet seen any change in customer behaviour from the recent conflict in the Middle East, but said it remained alert to any impact on consumer sentiment from the second half of 2026.
Chief executive Henry Birch said the results reflected good sales growth, higher margins and an increased dividend, but cautioned that it was early in the growth strategy with much still to do.
The company also confirmed that Jock Lennox, a chartered accountant and former EY partner, will join the board as chair following the annual meeting in September, succeeding Keith Williams
