Halfords downgrades expectations as cycle volumes -8% in Jan

A consolidating and challenging cycle market has continued to hamper Halfords Group’s financial performance, with weak consumer confidence also hitting its car retail market. On the positive side, its Autocentres business has not been hit so deeply.

Halfords revealed that volume in the cycling market fell year-on-year by 8.0% pts in January (vs a decline of 5.1% pts in Q3);

Its expectations on cycling have not been met having seen a “further material weakening” in cycling and its other core markets, including retail motoring and consumer tyres.

The owner of Tredz added that profit before tax is to fall in the range of £35-40m. This reduction in profit expectations is driven by key factors including weak consumer confidence: “The Cycling market has been impacted by a combination of continued weak customer confidence and unusually mild and very wet weather, which affected footfall into stores and sales of categories such as winter and car cleaning products.

“The Cycling market has become more challenging and competitive as it continues to consolidate. Promotional participation has increased, and more customers are purchasing on credit, leading to weaker gross margins than previously anticipated.”

Halfords had been linked to a purchase of the ailing WiggleCRC business, though recent reports strongly hint that Evans Cycles owner Frasers Group is picking up the Wiggle IP while virtually all Wiggle staff are reportedly being made redundant.