Motoring and bike giant Halfords PLC has revealed that it expects to make £32m-£37m in underlying pre-tax profits this year. 

The positive forecast from the household retail name, which also has a significant stake in servicing, comes after the retailer issued a profit warning almost a year ago, having made a U-turn from Stroud as part of a realignment of stores in 2023 – the reason given at the time being a shortage of skilled staff and dearth of bicycle sales.

Graham Stapleton, Halford's CEO, has a staff of 12,000 in total and despite today's figures has warned of the firm facing hard decisions on the road ahead as it seeks to mitigate measures from the autumn budget. 

In October, he said customers to the firm's 380 shops and 550 garages "remain cautious in their discretionary spending compounded by uncertainty around the contents of the upcoming autumn Budget", but added that the group was set on "controlling the controllables".

That focus appears to have paid off in today's figures, with the firm citing foul winter weather as a boost in retail activity particularly in terms of demand for batteries and ice scrapers.

Having begun life in Birmingham in 1892 as a wholesale ironmongery and now based in Redditch, Halford's update marks welcome news for shareholders. On the back of the buoyant forecast the figures trounced an earlier estimate of £28.3m – and shares rose by nearly 20% this morning.

The update stated: "In the interim results announcement published in November, we noted ongoing market volatility through the first half of FY25 and indicated that we expected this to continue through the second half of the year. In recent months, we have seen an improvement in trading alongside continued progress on a number of key initiatives, including our pricing and promotion strategies and cost reduction measures. Cumulatively, these factors lead us to expect FY25 underlying profit before tax of £32m to £37m."

However, looking at next year and beyond, the group sounded a note of caution: "Despite the recent positive performance, there remains considerable uncertainty regarding the outlook for the UK consumer in light of measures introduced by the Autumn Budget, which take effect from April and hence are in force for the entirety of FY26.

"While the impact of changes to the minimum wage and national insurance contributions are relatively easy to quantify, adding c.£23m to our direct labour costs in FY26 alone as announced in November, their effects on the demand environment and health of the broader economy are harder to predict."

The report added that Halfords continues to expect to see inflation passed through on managed services. "We continue to work on possible mitigations for the additional costs we face and will share our plans alongside our FY25 results."

The group's next statement will be in April.

● In a previous update, made last September, Halfords reported strong sales driven by growth in its services and B2B division. At the time, Mr Stapleton said he expected activity in services to outpace retail products for the first time by the end of 2024.