Halfords has beaten analyst expectations as its turnaround plan began to gain traction, with the retailer forecasting profit towards the top end of market forecasts for the year ahead.
The motoring and cycling specialist reported underlying profit before tax of £45.4m for the year to 3 April, ahead of analyst expectations of £40.3m.
Reported pre-tax profit came in at £43.6m, marking a return to the black after the business posted a £30m loss last year.
Revenue rose five per cent to £1.8bn, as growth across its autocentres and retail business helped offset pressure from a subdued consumer backdrop.
Halfords said it now expects underlying profit before tax for fiscal 2027 to land towards the top end of the analyst consensus range of £45.7m to £52.3m.
It said it had not yet seen any change in customer behaviour linked to the fallout from the Middle East conflict, but warned that any hit to consumer sentiment and spending power would be more likely to emerge in the second half of its financial year.
Halfords has been leaning more heavily into motoring services under chief executive Henry Birch, with its garage network becoming an increasingly important engine of growth.
Autocentre revenue rose six per cent on a like-for-like basis to £740m, supported by demand for repairs as drivers continue to keep older vehicles on the road for longer.
The strength of repair work helped offset “ongoing weakness” in the tyres market, the company said.
Freetrade analyst Duncan Ferris said Halfords was “finding growth in keeping Britons’ ageing cars on the road”, with 43 per cent of vehicles now aged 10 years or more.
Halfords’ stores also delivered growth, with like-for-like revenue up four per cent to £1bn despite pressure on discretionary spending.
Cycling sales rose 6.4 per cent, suggesting the category is beginning to stabilise after the sharp boom and subsequent slowdown triggered by the pandemic.
Halfords was one of the retailers to benefit from surging cycling demand during Covid, but the business has struggled to match those highs in the years since.
Ferris said there were still reasons to be cautious, particularly in retail, where profits remain under pressure as inflation and reinvestment weigh against stronger sales momentum.
Shares in Halfords have fallen sharply since the pandemic-era cycling boom. The stock hit highs of 430p in June 2021, but closed at 180p on Wednesday, around 60 per cent lower.
Birch, the former boss of Very and William Hill, took over last year after the sudden departure of Graham Stapleton, who had led Halfords for seven years.
The Halfords boss said the company was still in the early stages of its growth strategy.
“These are early days in our growth strategy and there is much still to do as we seek to leverage Halfords’ clear strengths,” he said.
He pointed to the retailer’s leading positions in motoring and cycling, its physical and digital reach, its brand and its services proposition as areas the business would look to build on.
Halfords also confirmed that former EY partner Jock Lennox will join its board as chair, replacing Keith Williams, whose departure was announced in November.
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