Shares in Halfords Group PLC (LSE:HFD), the motoring and cycling retailer and garage operator, fell 9% to 254.50p on Wednesday despite a broadly positive trading update.
The sell-off came even as the company reported like-for-like sales growth of 7.1% for the first half of its financial year, a figure that would typically reassure investors.
Halfords broke down the performance by division, with its Retail arm delivering like-for-like sales growth of 7.7% while its Autocentres garage business contributed a 6.1% rise.
The company kept its guidance for underlying profit before tax in a range of £55 million to £65 million for the 2026-27 financial year, offering no revision in either direction.
Halfords warned that profit would be weighted towards the first half, citing accelerated marketing and technology investment planned for the second half of the year.
That investment-heavy outlook for the second half appears to be what rattled investors, who pushed the stock sharply lower despite the encouraging headline sales figure.
Broker Panmure Liberum maintained its buy rating on the stock with a 300p target price, saying the update confirmed the strong trading it had flagged back in August.
Panmure Liberum highlighted that cycling like-for-like sales rose 8.3%, an impressive result set against a tough prior-year comparative of 9.0% growth in the same period.
Motoring sales rose 7.3% in the first half, representing a sharp acceleration compared to growth of just 2.9% recorded in the equivalent period of the previous financial year.
The broker noted that consensus underlying profit before tax of around £60.5 million for the 2026-27 year sits near the middle of the company’s guidance range, leaving potential room for upside.
Panmure Liberum’s own forecast of £60 million in underlying profit before tax assumes full-year like-for-like sales growth of 4.5%, which implies a meaningful slowdown to around 2% in the second half.
The shares currently trade on 13.7 times forecast earnings for the 2026-27 financial year, according to the broker, suggesting the valuation remains modest relative to the recovery underway.
