Halfords reports cycling sales surge during UK coronavirus lockdown
Halfords reported a jump in cycling sales during the UK coronavirus lockdown as Brits avoided public transport, however the boost was offset by a sharp drop in motoring sales, the retailer said this morning.
Halfords, which was classed as an essential retailer and was allowed to remain open during the lockdown, said overall group sales in the 13 weeks to 3 July were down 2.8 per cent compared to last year. Meanwhile, like-for-like sales dropped 6.5 per cent.
The retailer said the sales performance was “significantly better than anticipated in late March”, boosted by a 200 per cent surge in online shopping.
However the company’s share price dropped more than six per cent this morning.
Like-for-like sales in Halfords’ cycling business soared 57.1 per cent as the public sought an alternative to public transport and invested in new hobbies during lockdown.
Meanwhile, motoring revenue fell 45.4 per cent on a like-for-like basis, reflecting a drop in car journeys across the UK as the public were ordered to stay at home from 23 March.
“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,” chief executive Graham Stapleton said this morning.
“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.”
Halfords also reported that group revenue was £1.15bn in the year to 3 April, an increase of 0.3 per cent on the previous year.
Underlying profit before tax pre-IFRS 16 fell 4.9 per cent to £52.6m, as the retailer was hit by the beginning of the coronavirus pandemic in the UK.
“Being an essential retailer has meant the bikes to car parts group has been open throughout the lockdown and benefitted from both the bike boom and people restarting their car engines as lockdown has eased,” Fidelity Personal Investing associate director Emma-Lou Montgomery said.
“The cycling business has been the undoubted star performer, up 57 per cent on a like-for-like basis, as newbies and the UK’s existing 7m bike owners have dusted off their two wheels and taken to the roads for leisure and commuting.
“However, Halfords acknowledges it’s a totally uncharted road ahead and has withdrawn its existing guidance for the 2021 full year.
“Instead plotting out three potential routes that could see it with anything from pre-tax losses of £10m to zero, right up to a £10-£20m profit for the 2021 full year. Which path it takes remains to be seen, but investors should buckle up for a potentially bumpy ride.”