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Halfords warns profits may fall over winter as bike demand wanes

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Halfords warns income could fall over winter as bike demand wanes

A surge in staycations and demand for coronavirus-proof commuting boosted summer season gross sales of electrical bikes, scooters and roof packing containers at Halfords, however the automobile and bicycle elements retailer warned demand was more likely to see a “pure fall-off” through the winter months.

The group stated on Tuesday that revenues rose 7.5 per cent within the 20 weeks to August 21, citing “beneficial market shifts” that included the federal government’s Repair Your Bike voucher scheme and better curiosity in alternatives to public transport whereas social-distancing measures had been in place.

The retailer expects pre-tax revenue within the first half of its present monetary 12 months, for the six months to the top of September, to be between £35m and £40m, in contrast with £27.5m in the identical interval final 12 months.

Halfords is likely one of the retailers to have benefited from altering shopper behaviour through the pandemic, however the chain stated that winter would carry a few “pure fall-off within the relative energy of biking and staycation merchandise” and warned that income is likely to be decrease within the second half of the 12 months.

It added that the potential of additional virus outbreaks, rising unemployment, the impression of Brexit and colder climate all meant “an excessive amount of uncertainty . . . to supply significant 12 months steering”.

Graham Stapleton, chief government, stated gross sales of electrical bikes and scooters had greater than quadrupled through the pandemic, including that the group had accepted as many Cycle To Work authorities scheme vouchers within the 20-week interval as in all of final 12 months.

“There may be some proof that persons are shopping for bikes for important use, particularly for brief work trips . . . as employers encourage workers to come back to work by bike,” he stated.

The corporate had additionally seen its motoring enterprise “return to development” with individuals preferring to make use of vehicles as an alternative of public transport for shorter journeys in addition to vacation getaways in an try to socially distance.

Mr Stapleton stated he was “cautious” on the outlook for the rest of the 12 months.

Halfords is urgent forward with a beforehand introduced transfer to downsize its retailer footprint, which can contain the closure of 80 websites — or 10 per cent of its complete — within the coming months. The corporate has as an alternative invested in opening service garages and auto centres, which Mr Stapleton stated would imply “general variety of seen areas will in all probability be the identical or possibly extra”.

The group tripled spending on growing its on-line enterprise, the place gross sales grew 160 per cent to account for simply over half of complete income within the interval.

Analysts at Investec stated it was “not possible” to evaluate whether or not biking gross sales had been pulled ahead earlier into the 12 months by the federal government’s bike-fixing incentive, including {that a} “troublesome financial outlook” loomed. However they stated the outcomes had been spectacular and that the group was “nicely positioned with a powerful stability sheet”.

The corporate’s share value, which has jumped near a fifth since February, was up virtually 4 per cent on Tuesday morning.


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