Shares in Halfords increased by almost 16% after the motoring and cycling services retailer announced that it expects its profit before tax to reach the top end of its guidance range.

The firm reported that in the 53 weeks to 3 April, its group sales increased by 4.8%, while its underlying profit before tax rose by 4.1% year-on-year to £45.4m.

It also stated in its preliminary full-year results that its reported profit before tax reached £43.6m, following a loss of £30m in the previous year.

Halfords added that the ‘Optimise’ phase of its ‘Fit for the Future’ strategy, which is designed to build near-term value, has begun well and is already supporting stronger financial returns alongside an improved customer experience.

Chief executive at Halfords, Henry Birch, stated: "I am very pleased with the progress we are making in the ‘Optimise’ phase of our strategy, resulting in the strong results we are announcing today. With good sales growth, higher margins and an increased dividend, we are delivering improved shareholder returns alongside a more compelling customer proposition.

"These are early days in our growth strategy and there is much still to do as we seek to leverage Halfords’ clear strengths: leading market positions, an unmatched physical and digital presence in motoring and cycling, a trusted brand, and a unique services proposition made possible by more than 12,000 expert colleagues."

The retailer said that actions taken in the last financial year have created momentum in the business, and trading in April, May and June has been strong.

It added that while it has not seen any changes to customer behaviour in the recent conflict in the Middle East, but it remains sensitive to any potential impact.

As a result, it now expects its underlying profit before tax to be at the top end of its guidance range, with performance weighted towards the first half of the year.

Investment director at AJ Bell, Russ Mould, stated that the firm has put "pedal to the metal" in the last year.

He concluded: "Despite a tricky consumer backdrop, demand has been resilient with the momentum seen in early spring continuing into the summer.

"Halfords’ shareholders have experienced ups and downs over the years so may remain wary, but strong cash generation and improved profitability will create hope that the business is on a sustainable path.

"The market seems to be unfazed by the change of chair, with Jock Lennox coming in to replace Keith Williams."

---