Halfords – the transformation from a cycling and motoring retailer to an ‘omnichannel’ motoring services super-specialist continues, finals due on Wednesday, shares 172p could break 200p and above

23.06.2025

Since its mid-April Trading Update, the shares of Halfords Group (LON:HFD) have risen over 38%, from 124.20p to 172p currently – the big question asked by investors is whether that rise will be sustained.

We should get significant indications on Wednesday of this week, 25th June, when the motoring and cycling products retail group reports its Final Results for the 52 weeks to 28th March this year.

Like nearly all participants in the retail sector, the last couple of years have seen the group suffer significant cost pressures, which have been difficult to cope with and look to recovery.

The group’s Management pressured its pricing optimisation, while tightening up its overall product buying.

The Trading Update was better than market expectations, perhaps explaining why the shares have staged such a price recovery.

Just four years ago they were trading at 440p, prior to falling back to 124p a year later.

Over the last three years they have traded between 116p and 235p, reflecting trickier trading conditions.

However, that April Trading Update may well have proved to be the pivot of its fortunes, will that become evident this Wednesday?

The Business

Capitalised at some £375m, Halfords, which was set up in 1932, is today the UK’s leading provider of motoring and cycling services and products.

Its business model includes stores, garages, mobile vans, and home delivery.

They offer a variety of products, including: electric bikes, push bikes, and accessories; car parts; SatNav; car audio; tools; and child seats.

It also provides services including: vehicle servicing; MOT; maintenance; repairs; bike repair; vehicle part fitting; and basic audio and dash-cam installations.

The group’s customers shop at 373 Halfords stores, two Performance Cycling stores (trading as Tredz), 542 garages (trading as Halfords Autocentres, McConechy’s, Universal, National Tyres and Lodge Tyre) and have access to 280 mobile service vans (trading as Halfords Mobile Expert and National) and 504 commercial vans.

Group customers can also shop at halfords.com and tredz.co.uk for pick up at their local store or direct home delivery, as well as booking garage services online at halfords.com.

Through its subsidiary Avayler, Halfords also sells the group’s bespoke, internally developed software as a SaaS solution to major clients in the US, Europe and Australia.

The group has two main reporting segments: Autocentres, accounting for some 40% of group revenue; and Retail covering around 60% of group sales, across Motoring and Cycling.

Motoring across both segments represents around 80% of total sales.

In the last year the Halfords Motoring Club exceeded 5m members, who are now responsible for almost half of MOTs in its garages.

Management Comment

When announcing the Trading Update, which showed a strong finish to FY25, with expected profit around top of £32m-£37m range, CEO Graham Stapleton stated that:

“This is a performance to be proud of, mitigating more than £30m of inflation in what continued to be a very challenging trading environment in FY25.

I want to thank every single Halfords colleague for their hard work in achieving a significantly stronger result than we anticipated at the start of the financial year.”

The Equity

There are some 219m shares in issue.

Larger holders include Gresham House Asset Management (8.76%), FIL Investment Advisors (7.51%), Jupiter Asset Management (7.39%), Aberforth Partners (7.30%), Link Fund Solutions (6.76%), Livingbridge VC (6.76%), Janus Henderson Investors (4.67%), Dimensional Fund Advisors (4.24%), Lombard Odier Asset Management (4.17%), and JP Morgan Asset Management (4.15%).

Analyst View

Six analysts follow the group, half making the shares a Buy, the balance calling a Hold.

The average target Price is 167p, the Highest 200p, the lowest 144p.

Carl Smith, at Zeus Capital, in April rated the group’s shares as a Buy, setting an upgraded Target Price of 160p, when they were just 124.20p in the market.

His estimates for the last year, to 28th March, were for group revenues to have risen slightly from £1,697m to £1,730m, but with adjusted pre-tax profits falling from £43.1m to £36.0m, reducing earnings per share from 14.5p to 12.0p, but with a fractionally better dividend payment of 8.1p (8.0p).

For the year now underway, Smith goes for £1,752m sales and steady profits of £36.0m and 12.0p earnings, with a maintained 8.1p per share dividend.

The 2027 year, he predicts, will see an impressive uplift in sales to £1,820m and a 35% increase in profits to £48.6m, generating 16.1p in earnings and easily covering an improved dividend at 9.2p per share.

In My View

Despite the excellent price move since mid-April, I feel that this group’s shares, now at 172p, could so easily break back above the 200p level on hopes of a speedier recovery.