Halfords Group PLC (LON:HFD) said it expects higher demand in its motoring business as car journeys pick up, with the public shying away from public transport amid coronavirus fears.
Cycling is estimated to see strong trading throughout the year as many people are forecast to turn to commuter bikes and take advantage of the government's voucher repair scheme.
READ: Halfords cycles higher as it reports better than expected trading amid lockdown
The retailer said the second half of the year will see better profits and modelled three scenarios: the first will see an underlying loss before tax of £0-10mln, the second and third profits of £0-10mln and £10-20mln respectively.
They are based on forecasts of revenue dropping 9.5%, 7.5% and 5% respectively.
The FTSE 250-listed firm has been focusing on improving margins for the cycling business, which is more capital-intensive than motoring.
Group sales for the 13 weeks to July 3 were 6.5% below last year. As of Friday, 359 stores were open as normal, eight were operating under the 'dark-store' format, where customers can buy without browsing, and 77 remained closed.
In the year to April 3, revenue was flat at £1.1bn, while underlying profit before tax fell 5% to £52.6mln. The dividend was suspended to save cash amid the crisis.
"The strategic progress and financial stability achieved in FY20 should not be overlooked in what was a tough sector backdrop," analysts at Liberum commented.
"This, combined with the positive trend in recent trading, places upwards pressure on our forecasts and gives further reassurance that liquidity should not be an issue."
Shares lost 6% to 165.49p on Tuesday at the opening bell.
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