Halfords Group PLC (LON:HFD) said full-year profits are expected to nearly double after a better than expected performance in the fourth quarter as demand for bikes remains high.
The mechanic and bike parts seller forecast profit before tax to come in at £90-100mln in the year to April 2021, from £52mln a year ago, including the repayment of £10.7mln under the government’s furlough scheme.
READ: Halfords pedals higher as cycling boom continues to December-end
However, it is difficult to predict how trading will continue over the next few weeks, especially as the UK will spend Easter in lockdown, the company said.
The firm has continued to experience a volatile trading environment, but group like-for-like growth was 6% in the seven weeks to February 19.
Retail rose 5% and autocentres was up 13%, with strong demand for the garage business and Halfords Mobile Expert vans despite journeys being around 40% below pre-pandemic levels.
In retail, motoring business sales tumbled 14% although sales of blades, bulbs, batteries and general maintenance products have been performing better.
Shares jumped 19% to 344.59p on Monday morning.
Britons in lockdown continue to love bikes even during the winter as cycling sales surged 43%, which analysts at Hargreaves Lansdown attributed to a "deep-rooted and organic demand".
"As a less profitable faction of the group, growing cycling’s scale should bring incremental margin benefits. As the store estate becomes more streamlined, cycling sales could be more insulated from a reduction in shop numbers too. Cycling enthusiasts are more likely to travel a little further to get what they’re looking for, compared to someone that’s after a new wiper blade," analyst Sophie Lund-Yates commented.
"Service-related sales are an important growth catalyst too. This market is highly fragmented at the moment, and there’s market share for the taking. Expanding this part of the business, while shrinking retail, should lead to a lower fixed cost base. It’s also a more resilient part of the operation – this type of business can’t be snatched away from Amazon quite as easily."
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