Bicycles help Halfords’ ride profits up in lockdown

Halfords has lifted profit forecasts thanks to “unprecedented” demand for bikes and accessories.

The retailer said sales continue to rocket as commuters turn away from public transport. The shift has boosted its bicycle division and its car parts and servicing arm.

Halfords expects more than £55 million in pre-tax earnings for the six months to the end of September. Less than a month ago it said half-year profit would be in the range of £35 million to £40 million. The shares rose 31.4 per cent or 57p to 238½p, valuing the company at £430 million.

Halfords, founded in Leicester in the late 19th century, was able to keep its doors open during the initial phase of the lockdown as it was classed as an essential retailer. It operates 444 stores, 367 garages and 91 mobile service vans. Online orders account for more than half of turnover.

Halfords continues to enjoy robust growth, despite the busy summer coming to an end. Underlying sales across the group grew 22 per cent in the five weeks to September 25.

Sales at its cycling business rose 46 per cent thanks to “unprecedented levels of demand”. Car parts turnover increased by 7.5 per cent, with like-for-like turnover up 18 per cent at its autocentres. Halfords said it would hire hundreds of staff to meet rising demand.

The company sounded a note of caution for the second half of its year, saying: “The potential impact of second waves of Covid-19 now seems more pronounced than just a few weeks ago, and the economic impact of an end to the furlough scheme and the outcome of Brexit negotiations remains very uncertain.”

The company said it was “well placed” to withstand a downturn in trading and had a “strong” balance sheet and cash reserves.

Liberum, the broker, raised its full-year profit forecast by half after the “massive improvement” in underlying trading.

Halfords shares have doubled in value this year, with the company deemed to be one of the winners from the lockdown.

But it is worth less than its peak valuation of five years ago. The company failed to capitalise on the boom in cycling that followed the 2012 London Olympics, and it has faced criticism over its customer service.

Halfords is expected to prioritise attracting customers back into its stores to service and maintain their bikes.

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