Halfords warns profits may fall over winter as bike demand wanes

A surge in staycations and demand for coronavirus-proof commuting boosted summer sales of electric bikes, scooters and roof boxes at Halfords, but the car and bicycle parts retailer warned demand was likely to see a “natural fall-off” during the winter months.

The group said on Tuesday that revenues rose 7.5 per cent in the 20 weeks to August 21, citing “favourable market shifts” that included the government’s Fix Your Bike voucher scheme and greater interest in alternatives to public transport while social-distancing measures were in place.

The retailer expects pre-tax profit in the first half of its current financial year, for the six months to the end of September, to be between £35m and £40m, compared with £27.5m in the same period last year.

Halfords is one of the retailers to have benefited from changing consumer behaviour during the pandemic, but the chain said that winter would bring about a “natural fall-off in the relative strength of cycling and staycation products” and warned that profits might be lower in the second half of the year.

It added that the potential of further virus outbreaks, rising unemployment, the impact of Brexit and colder weather all meant “too much uncertainty . . . to provide meaningful year guidance”.

Graham Stapleton, chief executive, said sales of electric bikes and scooters had more than quadrupled during the pandemic, adding that the group had accepted as many Cycle To Work government scheme vouchers in the 20-week period as in all of last year.

“There is some evidence that people are buying bikes for essential use, especially for short work journeys . . . as employers encourage employees to come to work by bike,” he said.

The company had also seen its motoring business “return to growth” with people preferring to use cars instead of public transport for shorter journeys as well as holiday getaways in an attempt to socially distance.

Mr Stapleton said he was “cautious” on the outlook for the remainder of the year.

Halfords is pressing ahead with a previously announced move to downsize its store footprint, which will involve the closure of 80 sites — or 10 per cent of its total — in the coming months. The company has instead invested in opening service garages and auto centres, which Mr Stapleton said would mean “overall number of visible locations will probably be the same or maybe more”.

The group tripled spending on developing its online business, where sales grew 160 per cent to account for just over half of total revenue in the period.

Analysts at Investec said it was “impossible” to judge whether cycling sales had been pulled forward earlier into the year by the government’s bike-fixing incentive, adding that a “difficult economic outlook” loomed. But they said the results were impressive and that the group was “well positioned with a strong balance sheet”.

The company’s share price, which has jumped close to a fifth since February, was up almost 4 per cent on Tuesday morning.