Cycle sales bouyant despite overall dip in Halfords’ profits

Halfords has posted a 7% rise in cycling sales like-for-like in the publication of its interim results for the 26 weeks to 29th September, 2017.

Sales have held steady, but when it comes to pre-tax profits the business posted a near 10% dip for the first half-year, blamed largely on adverse currency shifts affecting retail margins.

Overall group revenues during the period rose by 3.8% compared to the year prior, while a 4.5% increase in retail trade eased the strain against a 0.6% decline in revenues from the auto-servicing division.

Cycling’s revenue rose by 2% on a like-for-like basis. In outlining its strategic direction, emphasis was placed on growing its premium cycling offering, with further investment in Cycle Republic, Tredz and electric bikes cited. Cycle Republic yesterday opened its 18th store on Bradshaw Way Retail Park, Derby. The new store boasts over 3,800 square feet of space, stocking over 125 bikes and thousands of cycle accessories.

Commenting on the opening, Cycle Republic Managing Director Peter Kimberley stated: “To have found such a busy site in Derby is fantastic. The team have worked really hard over the last few weeks and the shop is looking great. We are excited to bring such an incredible range of award winning cycle brands and an unparalleled workshop experience to the city! We can’t wait to welcome you into the new store.”

For the financial year 2018 the firm anticipates profit before tax to be in line with previous estimates. The statement offers: the depreciation of Sterling brings a c.£25m cost of goods increase in FY18 of which c.£15m was in the first half. Our mitigation plans are on track and we continue to anticipate that we will recover the full impact over time. The FX impact reduces going forward, and if Sterling remains at the current levels, we do not anticipate further adverse year-on-year impact in FY19. 

Jonny Mason, Chief Financial Officer & Interim Chief Executive Officer, commented: “We have delivered more improvements for our customers in this first half, with new services for motorists and cyclists, provided by trained, friendly, expert colleagues, and new ranges of great products. It is pleasing to report positive sales growth for this period, despite the poorer summer weather and the uncertainty in the UK economy. We are also pleased with our profit performance in the half, as we offset a large part of the c.£15m increase in costs that resulted from the impact of the weaker pound. Looking ahead, we have strong plans both in-store and online for the Cyber, Christmas and winter peaks.”

Fiona Cincotta, Senior Market Analyst at City Index noted a sharp slowdown in recent weeks, adding: “Like-for-like revenue growth in the retail business must have slowed substantially in the last six weeks of the trading period, given it was tracking at 3.5% at the 20-week mark, only to fall to 1.9% for the entire 26-week first half.”