Halfords UK Sees Strong Increase in Cycling Sales
REDDITCH, UK – Despite a troubling start in the early part of 2016 with high stock levels in the market, poor weather and earlier discounting by competitors Halfords Group Plc saw its cycling revenues grow by 4.6%. This is reported today by UK’s biggest in bikes in its interim results for the 26 weeks to 30 September 2016 period.
According to Halfords Group the UK cycling market declined in 2015 and, whilst gradually stabilizing, remained fragile in the early part of 2016. But, “the peak summer period benefited from warmer weather and also the success of Team GB at the Rio Olympics, which helped to clear much of the stock that had been building up in the market.”
Total cycling revenues up 15.4%
The retailers’ cycling like-for-like revenues increased by 4.6% for the 26 weeks period. The Group’s total cycling revenues however were up by a big of 15.4%. This is including the results of Tredz and Wheelies; the two online retail companies acquired by Halfords in May 2016. The 15.4% increase in sales also includes revenues of Cycle Republic stores and online sales that followed after the launch of the Cycle Republic transactional website in August as well as two new stores.
Buoyant cycling sales momentum
Halfords notes that its, “Strong performance during the peak Summer trading period more than offsetting the weather-impacted soft market conditions in April to June. The sales performance was driven by new ranges across kids and mainstream bikes, continued strong growth in premium bikes, and our competitive “20% off all bikes” promotion. Whilst we have been comfortable with our stock levels throughout the Summer, our promotion was in response to discounting observed in the market. The buoyant cycling sales momentum continued beyond the end of the promotion and into the Autumn, with 16.0% like-for-like growth in the final six weeks of the half.”
‘On-going importance of physical store network’
Halfords’ interim results also indicate the crucial role of its stores in its online sales. These sales revenues grew by 12.6% on a like-for-like basis and 29.7% in total, including the first-time inclusion of Tredz and Wheelies. “88% of online orders from Halfords.com and Cyclerepublic.com were collected in store, reflecting the on-going importance of the physical store network to our overall offer.”
‘Fall in sterling impacts profitability’
In the 26 weeks to 30 September 2016 Halfords Group total sales amounted GBP 567.3 millon; up 6.3%. Gross profit was up by 1.5% and gross margin stood at 50.0%. EBIT were GBP 41.8m compared with GBP 47.9m in the prior period. EBITDA were down 8.3% to GBP 57.1m. These drops were related to the depreciation of the sterling because of Brexit. David Cheetham, market analyst at London broker XTB.com said on this, ”The fall in sterling continues to weigh on Halfords’ profitability.”