Halfords hikes profit outlook thanks to warm weather boost

Wealth Club chief investment strategist Susannah Streeter insists Halfords’ challenge is “keeping the wheels turning once the heat windfall fades” after upgrading its annual profit outlook.

The car parts to bicycle chain expects underlying pre-tax profits of between £55-£65 million after benefitting from the UK’s summer heatwaves.

Increased sales of bikes, camping and air conditioning services helped secure extra profits of around £5million.

Streeter said: “The sun is shining on Halfords with shares accelerating after the retailer upgraded its profit expectations with the heatwave bringing in a swelling tide of purchases.

“As temperatures rose, bikes and camping equipment sold like hot cakes, as people made the most of the heat on weekend trips and UK staycations.

“The record-breaking weather also saw a surge in demand for aircon services for cars, to keep motorists and passengers cool.

“Halfords said the unusually warm weather generated incremental profit in the mid-single-digit millions of pounds. Shares surged up to 14 per cent in early trading, but some gains were pared back as investors appeared to assess the longer-term implications for the company.

“The weather accounts for a large bulk of the profit upgrade, so there is still a question mark over how much of the improvement reflects underlying strength in the business.

“Management says some of the gains from this summer of spend will be invested in technology and marketing, but with profits expected to be heavily weighted towards the first half, the challenge will be keeping the wheels turning once the heat windfall fades.”