Cycling market to stay strong for rest of year says Halfords

Halfords, the UK’s biggest cycling retailer, believes that the bicycle market will “remain strong” for the rest of the year and says it will “work hard to supply these unprecedented levels of demand.” The company also expects sales in the car parts and accessories segment of its business to improve as motorists start driving more following lockdown.

Classified as an essential retailer under government rules announced at the end of March, Halfords said that it had seen strong growth in cycling sales in the 13 weeks to 3 July, a period that began just a week after the UK entered lockdown.

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Like-for-like (LFL) sales, which strip out the impact of changes in the store portfolio, were up by a whopping 57.1 per cent due to people turning to bikes both for transport and to undertake exercise and family outings.

“Our cycling business has performed very strongly throughout the period, up 57.1 per cent on a LFL basis, significantly boosted by the avoidance of public transport, favourable weather conditions and increased adoption of cycling as a health and leisure activity,” said Halfords.

“The easing of the lockdown has led to the gradual reopening of schools and workplaces, and while public transport is avoided and road congestion increases, cycling is becoming an essential way of commuting for many people.

“For consumers with older bikes, which we estimate could amount to 7 million in the UK, servicing and repairs have proved an inexpensive and popular way to reengage in cycling, with cycling service-related revenue up 41.9 per cent on a LFL basis in the 4 weeks to 3 July.

“Alongside mainstream cycling, our performance cycling business, Tredz, has also traded very strongly, up 87.3 per cent year-on-year on a LFL basis, benefitting from the successful transfer of inventory and customers from our Cycle Republic business, which closed in April.”

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In motoring, however, like-for-like revenue dropped 45.4 per cent as car use fell sharply, particularly in the early weeks of lockdown.

Group sales during the period were down 2.8 per cent against the comparable period last year, while like-for-like sales fell by 6.5 per cent.

Looking ahead, the Redditch-based business said: “We believe cycling demand will remain strong throughout the year and we will work hard to supply these unprecedented levels of demand,” – although as we explained on road.cc at the weekend, retailers may find it increasingly difficult to source bikes as the year progresses.

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“We expect a shift towards commuter bikes, as people return to workplaces and cycling infrastructure improves, and we expect bike servicing and repairs to become more in-demand as consumers take advantage of the Government's voucher repair scheme.”

“We also expect motoring demand to improve during the year, as car journeys pick-up, workplaces and schools reopen and our retail stores can open with fewer safety restrictions in place.

“The transmission risk of COVID-19 is significantly higher in confined indoor spaces, meaning that car journeys will be seen as a safer alternative to public transport and, as winter approaches, a more pragmatic and comfortable alternative to cycling and walking.”

The company added: “It seems likely that our mix will remain biased towards cycling and away from motoring in the short-term.

“Although this tailwind is welcome,” Halfords said, “cycling is a lower margin, more capital-intensive segment than motoring,” and therefore makes less of a contribution to profits.

The trading update for the first quarter of its 2020/21 financial year came as Halfords announced its annual results yesterday for the 53 weeks ended 3 April 2020, with underlying profit before tax of £52.6 million on group revenues of £1,155.1 million.

The company’s chief executive officer, Graham Stapleton, said: “The start of the current financial year has of course been dominated by the impact of COVID-19, and our status as an essential retailer was a clear endorsement of the wider role that Halfords has to play in keeping the UK moving.

“Having responded quickly and decisively to cater for the surge in popularity of cycling during lockdown, we are now seeing increased demand for motoring services and products as people start using their cars regularly again having not done so for the last few months,” he added.