Halfords has announced it will pay back £10.7m in furlough scheme cash to the government after enjoying better than expected sales at the start of this year.

The cycling and car parts business said trading remained “volatile” and hard to predict as lockdowns continued but told investors it now expects full-year profits could nearly double.

The Treasury has spent tens of billions of pounds supporting the wages of workers temporarily laid off due to the coronavirus crisis, though retailers that have been allowed to remain open during lockdowns have come under pressure to give money back.

Halfords has benefited from a boom in demand for cycling products as people are forced to stay at home but the restrictions have weighed on its car business.

In its latest update the retailer said it “continued to experience a volatile trading environment” in the seven weeks to 19 February but that overall sales had been “stronger than we initially expected across the business”.

It pencilled in underlying profits of £90-100m for the current financial year, up from £52.6m in the year to the start of April last year, and well ahead of market expectations.

The company said: “The board has taken the decision to repay in full £10.7m of furlough income received, and the profit range is after this repayment.”

Shares rose 17% in early trading following the update.

Halfords said like-for-like sales rose 6.2% over the seven-week period.

Its motoring business saw a decline of 14% but that was not as bad as expected with sale of blades, bulbs, batteries and general maintenance products doing better, the group said.

Cycling sales were up 43% on the same period a year ago though disruption in supply chains – while improved from that experienced at the end of last year – continued to have an effect.

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