Halfords cycle sales up 2.6% in FY19

Halfords’ financial report for the fiscal year 2019 has been released, showing a 2.6% like for like sales growth of the retail giant’s cycle business.

Although cycle sales took a marginal dip in Q3 of the fiscal year of 0.3% (FY19 represents trading for the 52 weeks up to 29th March 2019), in the other quarters of the year cycle sales were up. In fact, although the first half of the year started fairly slow with a 1% like for like increase, the last quarter of the year saw a surge in sales growth, up 12.4% like for like.

In the report’s operational highlights section, Halfords referred to its strengthened market leadership in cycling over the year, and group online sales growth of almost 10%. Although, the retailer did attribute a 1% increase in retails operating costs due to a weaker cycling market this year than previously.

Group online sales, which represent 20% of total Group sales, grew 9.5%, with 83% of Halfords.com orders being collected in store, perhaps indicating the appetite for click and collect amongst consumers.

The retail financial overview revealed a 0.8% like for like increase in revenue for the year to £977.2 million, in-keeping with the general upwards trend of gross margin in line with previous years.

Overall in FY19, entire group revenue was up 1.1% like for like, totalling £1138.6 million, yielding a gross profit of £579 million, up 1.5% year on year. Free cash flow was also up by £1.2 million (+2.9%) to £42.7 million, and full year dividend up 3%, year on year.

Looking towards FY20, Halfords has estimated the yearly profit before tax to be broadly in line with that of this year, assuming average weather conditions across the year and a consumer and economic outlook in line with that experienced during the second half of FY19. The group does, however, also expect underlying sales growth to be muted in FY20, “given the current challenging economic backdrop and consumer environment.”

Graham Stapleton, Halfords Group CEO, said of the results: “Halfords Group has delivered sales and Free Cash Flow growth in what remains a challenging UK consumer environment. While motoring continued to be impacted by extremely mild weather conditions, we are pleased to have seen continued and sustained growth in cycling, underpinned by improvement in our exclusive own brand ranges.

“Since launching our new strategy, we have seen encouraging early progress. As we strengthen our unique services proposition customers are responding positively, and we are particularly pleased that nearly a quarter of all Halfords sales are now service related.

“Consumer confidence remains fragile; however, we remain confident that the strength of our customer offer, our people, our strategy and clear focus on our medium-term financial targets leave us well-placed for long-term sustainable growth.”

Looking to FY20, and further to the news last October of Brompton’s new long-term partnership with Halfords, the details have now been fleshed out, with the brand to be retailed at 49 Halfords shops with an extended range available through Halfords.com.