Halfords shares surged to a four-year high following an upward revision of the retailer's annual profit forecast, driven by unusually warm summer weather that bolstered sales of seasonal items. The company announced that heightened seasonal demand for products, including air conditioning units, has contributed an additional £5 million to profits.
Unseasonably warm weather has led to increased consumer interest in the company's offerings, prompting an expectation that annual results will be weighted more heavily towards the first half of the fiscal year. Halfords now projects its annual pre-tax profits to be in the range of £55 million to £65 million, surpassing previous estimates of £52.6 million. The company's stock price saw an 11% increase at the market open, reaching 271 pence, which extends its year-to-date gains to over 90%.
"Halfords has continued to outperform over recent months," the company stated. "This reflects momentum in the underlying business as we continue to deliver against our strategic priorities alongside a very strong performance in seasonal categories, in part reflecting unusually warm summer weather."
This positive outlook provides a welcome development for Halfords as it works to increase sales and mitigate rising operational costs across its garage and retail divisions. The retailer is also focused on modernizing its garage network by equipping most sites with specialist electric vehicle servicing equipment and providing staff with tablets to enhance vehicle inspections. Over 100 such garages have been opened, with plans to add another 35 this year.
The FTSE 250 firm had previously returned to profitability in the last financial year, marked by a 4.8% rise in like-for-like sales. Halfords noted that its repair services have gained traction, and the company views Britain's aging vehicle stock as a significant opportunity for future growth.
Chris Beauchamp, chief market analyst at IG, commented on the company's performance, stating, "Halfords shares have really climbed in recent months, and today's numbers seem to confirm that this wasn't just due to over-inflated expectations. Not only was guidance boosted significantly, but the whole forecast bracket sits above previous expectations." He added, "The risk now is that the end of the long hot summer will see appetite for getting out and about start to dim, but a pickup in marketing should help offset that to a degree."