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Halfords Group PLC (LON:HFD) pedalled higher on Thursday after posting strong sales across the board, with cycling proving popular even in the autumn months.
However, the current lockdown is hitting demand for its motoring products and services, with fewer car journeys being made across the UK, which cycling is not expected to offset since it is seasonally smaller during the fourth quarter.
READ: Halfords doubles interim profits thanks to essential retailer status
Nonetheless, the bike parts seller and mechanic saw sales jumping 12% in the 13 weeks to January 1, its third quarter, with retail up 10% and autocentres surging 21%.
The firm said it was due to a significant increase in market share, driven by its digital operating model, the first group-wide motoring campaign and expansion of the Halfords Mobile Expert vans proposition.
In retail, cycling sales were up 35% thanks to the adult mechanical, e-bikes and e-scooters, despite global container shortages and port congestion impacting availability, though motoring shed 8% due to low traffic volumes amid COVID-19 restrictions.
After announcing plans to reshape the portfolio in November 2019, the FTSE 250 group has closed 33 sites and plans to close another 47 financially low-returning stores and garages before the end of the financial year.
The extra closures will result in an annualised benefit of over £6mln on profits after an exceptional cost of £25-£30mln.
“The fourth quarter is always a big motoring quarter and a smaller cycling one (purely for climatic reasons) so the lockdown will have an impact and it would be a good effort from Halfords to hold like-for-like positive in the quarter,” analysts at Peel Hunt said.
“There are still issues with bike availability but Halfords is better placed than its competition and it is not as though customers are going elsewhere: we sense good pent-up demand for cycling into next summer, even if the financial year 2021 numbers are good.”
Shares rose 4% to 288.5p on Thursday morning and pedalled 7% higher to 298.2p in the afternoon.
–Updates shares–
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