Halfords, the UK’s biggest cycling retailer, has issued a profit warning, blaming “exceptionally mild weather” and says that weak consumer confidence caused sales of adult bikes to fall in the 14 weeks to 4 January, which includes the key Christmas trading period.
Total group revenue at the car parts to cycling retailer fell 2 per cent during the period, which corresponds to the third quarter of the company’s 2018/19 financial year, and for the first three quarters of the period stands just 0.6 per cent ahead of last year.
On a like-for-like basis, which excludes changes in the company’s store portfolio, cycling revenue was down 0.3 per cent for the quarter compared to growth of 8 per cent for the equivalent period a year earliier, but is 0.5 per cent up for the first nine months of the current financial year.
The Worcestershire-based company said that during the 14-week period, “Growth in cycle accessories and children's cycling was offset by a decline in the more discretionary and bigger-ticket adult bikes.”
The company’s shares plunged more than 20 per cent today as it downgraded its expectations of underlying profit before tax for 2018/19 to between £58 million to £62 million, adding that it expected consumer confidence to remain fragile into 2020 and anticipates profit for the next financial year to be in a similar range.
Halfords’ chief executive officer, Graham Stapleton, said: "This has been a challenging third quarter for the business, driven by exceptionally mild weather and ongoing weak consumer confidence. Together, these factors have led us to reduce our profit expectations.
“Whilst this has been a difficult period, we have managed costs and margin well and our free cash flow remains strong. Halfords is a robust business and we firmly believe that the strategy we outlined in September is the right direction for the business."
The company claims to have 19 per cent share of the £2 billion UK cycling market, and besides trading from more than 450 stores in the UK and Republic of Ireland and through its website also owns the 20-strong Cycle Republic chain and online retailer Tredz.
Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.