Halfords sees strong demand for cycling products but says supply challenges “remain acute”

Halfords has announced its preliminary results for the 52 weeks to 2nd April 2021, with strong performance driven by share gains in motoring services, profitability improvements across the group, and share gains and strong demand in cycling.

LFL sales grew 14.6%, with cycling up 54.1% LFL. There was strong cycling services growth of 51%, and Tredz grew revenue by 66% and profit by £7 million YoY, as the retailer focused its investment on one performance cycling brand following the closure of Cycle Republic.

The two-year LFL growth rate (vs. FY20) for the first nine weeks of FY22 for retail cycling was 42%. Within its retail business, pent-up demand and the restrictions on foreign travel will give rise to increased demand for Halfords’ touring and cycling products, it said.

“There are, however, external factors that add uncertainty to our outlook,” the retailer added. “Supply challenges for cycling products remain acute, and a return to normal trading patterns remains highly uncertain, particularly in H2, as the hospitality industry and international travel potentially reopen to a greater extent. The general economic outlook remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases.”

It continued: “In the longer term, we are confident in the outlook for the motoring and cycling markets and our ability to compete strongly in both. We have demonstrated the resilience and growth opportunity in our services and B2B businesses by gaining market share through increasing scale and convenience alongside enhancing the overall customer experience.

“We also believe that the increased adoption of cycling will continue, supported by Government investment and a societal need to tackle climate change. As a business, we will continue to drive our markets by launching more new and exclusive products, becoming the market leader in electric mobility as the UK switches to a sustainable future, and continuing to engage our customers by creating a seamless digital and physical experience. Building on the strong foundations we have created in FY21, Halfords is well-positioned to accelerate its transformation journey.”

Graham Stapleton, chief executive officer, said: “We are delighted to have delivered a year of very strong financial and operational progress, especially in light of the extraordinary challenges presented by the pandemic. As ever, I would like to thank our outstanding colleagues across the business for their hard work, professionalism, and dedication.

“It was a year in which Halfords’ transformation into a service-led business was rapidly accelerated, and we were particularly pleased to achieve a record revenue performance in the strategically important area of motoring services. We have continued to increase our scale and capacity in this area and customers can now receive our services at almost 800 fixed locations, or at home from one of our 143 mobile expert vans.

“We have also continued to lead the transition to an electric vehicle future by investing in training and technology. By the end of the current financial year, we will have trained more than 2,000 of our store and garage colleagues to service electric cars, bikes and scooters.

“Demand for our services remains strong in the new financial year, and our touring categories are currently performing particularly well given the trend towards staycations this summer. In the longer term, we remain confident in the future prospects for the UK’s motoring and cycling markets and our ability to compete strongly in both.”

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