Halfords reports 184% jump in profits amid global bike shortage

Halfords has warned of on-going shortages of bikes around the world as it almost tripled profits after a surge in cycle sales during the pandemic.

The bikes and motoring retailer said pretax profits rose 184% to £64.5m in the year to 2 April, as total sales rose almost 14% to £1.3bn.

Growth was led by a 54% rise in sales of cycling products at established stores as the nation turned to two wheels for leisure and to socially distanced alternatives to public transport. Sales of e-bikes and electric scooters were particularly strong – up 94%.

Graham Stapleton, the chief executive said: “Supply was, and remains, a challenge, but where necessary, we quickly adapted specifications and componentry to mitigate bottlenecks in production and worked with new suppliers to achieve a steady intake of bikes throughout the year.”

The cycling performance offset a 12% fall in motoring products at Halfords stores as the number of cars on the road fell by a quarter last year.

The group’s Autocentre car servicing group also increased sales by almost 32% as it helped families get cars back on the road after time out during lockdowns by sending technicians out to homes with a new fleet of 143 vans.

Halfords is now aiming to add a further 60 vans in the year ahead and looking to acquire further motor service businesses as it plans to increase its number of garages to as many as 550 from 374 at present.

“Covid-19 was clearly the most significant challenge faced by any retailer, but we have also faced Brexit, container shortages, port congestion and more recently, the blockage of the Suez canal. Our performance not only showcases the resilience of our core business and the relevance of our strategy, but also the importance of our progress in creating a more efficient and profitable business,” the chief executive Graham Stapleton, said.

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The group’s profits were boosted by a radical overhaul of its store estate including the closure of 22 Cycle Republic outlets and 42 Halfords stores last year, a move that will save more than £15m a year in costs. Meanwhile, online sales more than doubled to account for more than two-fifths of the group total.

Halfords said demand for bikes and cycling products had remained strong in recent weeks – up 42% in the nine weeks since 2 April. It has tripled its bike-building capacity to help meet demand and said it repaired and serviced over 1m bikes last year as the nation dug old sets of wheels out of sheds and garages.

Sales are expected to stay buoyant as restrictions on foreign travel and a return to more normal motoring helped both cycling and motor-touring sales.

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Increased adoption of cycling in the past year was likely to continue thanks to government-backed investment in infrastructure and “societal need to tackle climate change”.

However, Halfords warned its performance was likely to be affected by on-going shortages of cycling products, while profit margins would be squeezed as it was cutting prices on motoring products.

“The general economic outlook remains challenging, with consumers likely to be more cautious,” said Graham Stapleton, the chief executive. “The dramatic acceleration in online shopping and a more challenging economic picture have brought value into sharp focus.”


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