Halfords ready for headwinds as profit forecast to leap past £55 million

Halfords has today issued a trading update within which it has concluded first half pre-tax profits will likely surpass £55 million.

Built on the back of momentum attributed to the boom in cycling uptake, a strong staycation trade and steady return to normality for motoring, the 20-week trading update has this morning seen the group’s share price jump by over 20% during early trading.

Cycling has continued its Covid-19 led sales trajectory, rising over 46% like-for-like in the five-week period to September 25th, reflecting the strength of Halfords’ improvement in supply to meet unprecedented levels of demand. Performance cycling business Tredz, part of the Halfords portfolio, has led the charge in the absence of the Cycle Republic business.

Motoring in its retail business improved to +7.5% like-for-like in the five-week period. Autocentres business continued to grow strongly, up +18% LFL (+64% including acquisitions). This included exceptional demand for the firm’s growing Mobile Expert proposition, driven by customers seeking greater convenience and safety from its fleet of vans.

In order to meet that demand for mobile mechanics, Halfords has launched a national campaign to recruit hundreds of skilled technicians, though primarily for the auto business.

Group like-for-like (“LFL”) growth in the five weeks to 25 September 2020 was +22%.

With the trading update coming in ahead of forecasts, Halfords has traded well through Covid-19’s first wave, yet remains cautious that the second half results won’t come as easily.

“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. We are well placed to address any headwinds we may face and capitalise on the tailwinds as they arise. Our balance sheet and liquidity position remain strong,” said the firm.

A further update is expected during November.