Lockdown cycling boom propels Halfords to bumper profits
Halfords pedalled to bumper interim profits on Wednesday as Britons got on their bikes during the Covid-19 pandemic.
Underlying pre-tax profit rose to £56m in the six months to October 2, up from £25.9m a year earlier.
Like-for-like sales in the cycling products unit rose 54.4% in the first half, which offset a 23.7% fall in motoring product venue as fewer people drove during the lockdown.
“We have worked hard to capitalise on the cycling market tailwinds by sourcing more stock from existing and new suppliers, as well as launching new products and brands to serve the high level of demand for our cycling products and services,” the company said.
It added that it planned to train 100 more electric car technicians next year, taking the total to 470 and planned to grow the number of e-bike and e-scooter servicers in stores to more than 1,800 from 400.
“This means that, by April, each of Halfords' garages will have at least one electric car technician, with electric bike and scooter servicers in every store,” the company said.
Halfords said trading for the first five weeks of its second half was "relatively strong with good growth and increased market share in cycling, alongside resilience in our motoring products and services businesses".
However, it also noted some impact on trading as the second lockdown in England started on November 5, with car traffic levels at around 70% of normal levels.
“We remain cautious on the impact that national and local lockdowns may have on our second half performance, with fewer vehicles likely to be on the road,” the company said, adding that it expected good levels of cycling demand to continue even with the winter months approaching.
“Given the latest national lockdown announced by the government and the inherent uncertainty in the current trading environment, including the outcome of Brexit negotiations, we do not believe it appropriate to provide profit guidance for 2021.”
Hargreaves Lansdown analyst Nicholas Hyett said Halfords had successfully cashed in on the Covid trend of online shopping wirth "a real world presence".
"The uptick in cycling interest may be out of Halford’s hands, but an increasingly knowledgeable staff and excellent inventory management meant it was waiting for customers at the right time, with the right product. Frankly just servicing a 54.4% increase in cycling sales is impressive," he said.
"The very strong demand for Halfords Mobile Experts is another sign of how important services are becoming to the group’s wider offer. Offering customers a range of service options, from store battery fittings, to autocentre MOTs to mobile tyre replacements, all through an online platform helps the group compete in a way that a pure online offer never could."
Hyett added that shifting "a substantial amount" of debt off the balance sheet gave the group "a fairly solid base for future innovation".
"We think the service driven offer will help Halfords survive the turmoil that's currently engulfing much of the retail sector, in fact if newer initiatives continue to deliver it may even thrive,” he said.