Halfords UK Cycling Sales Grow Despite ‘Challenging UK Consumer Environment’
REDDITCH, UK – Bicycles and car parts retailer Halfords UK has reported a 24 percent fall in annual pre-tax profit and forecast a flat outcome for the next financial year. However, the company said that a mild winter had boosted cycling, with like-for-like cycling sales up 2.6 percent. This was despite pre-tax profits of GBP 51m (58m euro) for the 12 months to May 2019, down from GBP 67.1m (76m euro) in the previous financial year, even though revenues rose 1.1 percent on a like-for-like basis to just over GBP 1.1bn (1.3bn euro).
In September 2018, under new CEO Graham Stapleton, Halfords set out a strategy to become “A truly differentiated, service-led super specialist,” focused on motoring and cycling. This move upmarket to position itself as a cycling ‘specialist’ can be seen in the recent announcement revealing that folding bike specialist Brompton’s core range will have its own branded display at 49 Halfords shops, with an extended range available from Halfords.com. The 49 shops will also have access to a further five Brompton models through click-and-collect, while Halfords is also offering the option to order and collect in a further 76 stores. The range includes the new Brompton B75 folding bike, the most affordable model yet, priced at GBP 745 (846 euro).
Year End Profits Down 24% but Cycling Sales Strong
The move to integrate retail store sales with an increasingly strong internet presence as outlined by the Brompton deal was also borne out by the latest figures. Group online sales, which represent 20 percent of total Group sales, grew 9.5 percent, with 83 percent of Halfords.com orders being collected in store.
Sound strategy in tough trading conditions
With high street retail giants succumbing to administration in the UK on a regular basis it seems that Halford’s slowly but surely strategy is being viewed as largely successful, despite the profits plunge, given weak consumer confidence and Brexit uncertainty.
As Sophie Lund-Yates, equity analyst at Hargreaves Lansdown commented “Halfords’ saving grace is its position as a specialist, the likes of Amazon and other online competitors can’t compete with the face-to-face service on offer. The fact is, the internet can’t fix your headlights for you, or offer personal recommendations on the right bike for your child. The other piece of good news is costs have been well controlled, meaning even as trading conditions have become more difficult, the core of the business has been able to keep its head above water.”