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Halfords warns profits may fall over winter as bike demand wanes

Halfords warns profits may fall over winter as bike demand wanes 2020-09-09Leave a comment

electrical bike Halfords warns income might fall over winter as bike demand wanes

A surge in staycations and demand for coronavirus-proof commuting boosted summer time gross sales of electrical bikes, scooters and roof bins at Halfords, however the automotive and bicycle components retailer warned demand was more likely to see a “pure fall-off” in the course of the winter months.

The group mentioned 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 higher curiosity in alternatives to public transport whereas social-distancing measures have been in place.

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

Halfords is among the retailers to have benefited from altering client behaviour in the course of the pandemic, however the chain mentioned that winter would carry a couple of “pure fall-off within the relative energy of biking and staycation merchandise” and warned that income could be decrease within the second half of the yr.

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

Graham Stapleton, chief government, mentioned gross sales of electrical bikes and scooters had greater than quadrupled in the course of 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 yr.

“There’s some proof that individuals are shopping for bikes for important use, particularly for brief work trips . . . as employers encourage staff to come back to work by bike,” he mentioned.

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

Mr Stapleton mentioned he was “cautious” on the outlook for the rest of the yr.

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

The group tripled spending on creating 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 mentioned it was “unimaginable” to evaluate whether or not biking gross sales had been pulled ahead earlier into the yr by the federal government’s bike-fixing incentive, including {that a} “tough financial outlook” loomed. However they mentioned the outcomes have 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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