Halfords Group PLC (LSE:HFD) shares jumped as much as 13.9% to an intraday high of 274.5p on Thursday after the motoring and cycling retailer upgraded its profit expectations following strong trading.
The shares were later up 11.6% at 269p, compared with Wednesday’s close of 241p.
Halfords now expects underlying profit before tax of between £55 million and £65 million for the current year, comfortably ahead of market consensus of £52.6 million.
At the £60 million midpoint, the new guidance is around 14% above consensus and 11% ahead of Panmure Liberum’s previous £54 million forecast.
Broker Commentary
The broker, which has a Buy recommendation and 260p price target, described the update as “clearly positive” and sees meaningful scope for earnings forecasts to move higher.
Trading has remained strong following an encouraging end to the previous year, supported by continued underlying momentum and particularly strong seasonal demand during unusually warm summer weather.
Halfords estimates the weather-related boost generated incremental profit in the mid-single-digit millions of pounds.
Panmure Liberum calculates that this accounts for roughly two-thirds of the upgrade at the midpoint, meaning the improvement is not solely weather-driven.
The broker also highlighted improving like-for-like sales and margins exiting the previous year, when group comparable sales rose 4.8% and gross margin expanded by 210 basis points.
Looking further ahead, Panmure expects further benefits from remaining Fusion garage conversions, modest cycling growth and the rollout of lessons from Fusion across the wider Autocentres estate.
Halfords expects profit to be more heavily weighted towards the first half as it accelerates investment in technology and marketing later in the year.
