Cycle revolution at Halfords

Underlying bike sales surged 19 per cent, and in the final quarter the growth rate reached an eye-watering 42 per cent. The growing popularity of cycling and good summer weather were factors, but self-help initiatives also played their part: refreshed bike ranges, store refits and a wider selection of parts, accessories and clothing drew customers in. A new website, launched in November, also helped: online revenues jumped 18 per cent. So far, however, the recovery has come at the cost of margins; overall retail sales rose 8 per cent to £803m, but underlying operating profits were only up 2 per cent at £75.2m.

Robust growth in retail offset a slower performance from the smaller autocentres division. Still a work in progress, the unit saw profit slump 32 per cent to £4.3m. That was due to investment in infrastructure, IT - the operating platform hadn't been upgraded for a decade - and, crucially, customer service, which has historically been poor. Having appointed a new boss at the end of the year, Mr Davies says the autocentres are now "in much better hands".

Last year autocentre sales grew 9 per cent, but like-for-like sales were flat - suggesting expansion has been too fast. The opening programme will now slow, with Halfords focusing on fewer, larger centres. Management expects underlying sales to pick up substantially this year, boosting cash profits. At the group level, broker Peel Hunt expects pre-tax profit of £80m for 2015, giving EPS of 30.4p.