Shares in Halfords, the Redditch-based car parts and bicycle retailer, rallied last night after spending most of the day in negative territory despite a healthy 7.9 per cent rise in half year profits.
The market rated the result "in line with expectations" and marked the stock down by 3p to 337p in early trading.
Others spotted a buying opportunity and the shares closed 2.5p up on the day at 342.5p.
Halfords said profits before tax and exceptional items for the six months to September 29 hit #43.5 million compared with #40.3 million in the same period last year.
The improvement came on the back of a 9.3 per cent rise in sales to #369.2 million.
Stripping out exceptional costs, which arose mainly because of a restructuring of Halfords' credit line and the closing out of an interest rate swap, yielded an underlying pretax profit of #40.9 million, a rise of 1.5 per cent over the same-basis figure last time.
The sales growth was 6.5 per cent when changes to store space were stripped out, including the addition of 13 new outlets to take the total to 420.
The company has invested #40 million in new and refurbished stores over the last two years and floor pace had increased by 100,000 sq ft to 3.5 million square feet since the start of the current year.
Halfords said it benefited from the wettest May for 23 years which boosted sales of windscreen products and light bulbs for cars.
It also said the satellite navigation market remained strong while the introduction of child seat safety legislation in September led to increased demand for seats and booster seats in cars for children up to the age of 12.
Halfords supplies one in every three bicycles sold in the UK, and the company said folding bikes used for commuting, particularly on public transport, "performed particularly well".
It also reported strong demand for its own range of bikes under the Apollo and Carrera brands, which include children’s bikes, BMX models, mountain bikes and racers.
Halfords, which employs 10,000 people in the UK opened its first standalone Bikehut store in Brighton earlier this month.
Outside the UK, Halfords is rolling out new "supermezzanine" format stores in Ireland and now has ten outlets in the republic. Three sites are being developed in the Czech Republic with the first store due to open in 2007.
Chief executive Ian McLeod said trading in the first six weeks of the second half was in line with expectations and said he was confident about the firm’s prospects.
"The group has maintained its momentum within car enhancement and car maintenance, and we have also delivered a strong performance within the leisure categories of cycling and travel solutions," Mr McLeod said.
"Growing sales in all categories has therefore provided us with further confidence in our trading prospects for the second half."
Retail analyst Nick Bubb, of Evolution Securities, said first half sales were "not as good as expected" but margins were "better than feared". "The outcome of #43.5 million pretax profits is therefore better than the #42.5 million we’d expected," he said.
Mr Bubb lifted his full-year profits forecast from #81.5 million to #82 million. Halfords is spending #50 million on buying back shares.