The well-reported supply chain disruption gripping the bike industry has today been illustrated in Halfords’ trading update, with cycling sales down by nearly 23% in the 20 weeks to August 20th when compared with the same period last year.
As is the case across much of the cycling world, various headwinds have prompted a rapid slowdown on what began as a ‘boom’ period with production limitations halting the finishing of bikes. Upstream of production, raw material costs are steadily rising on everything from key metals to the cardboard used in packaging. Alongside, heavy disruption continues with freight forwarders.
Graham Stapleton, Chief Executive Officer, commented: “The first 20 weeks of FY22 delivered a strong trading performance against a hugely challenging backdrop. Our motoring business now represents 65% of our revenues and continues to go from strength to strength, driven by the increased scale of our Autocentres business, the ongoing demand for our Halfords Mobile Expert Vans, and by recent staycation trends. Although our cycling business is currently impacted by the considerable disruption in the global supply chain, as the UK’s largest cycling retailer we are well positioned to adapt and to serve our customers, and we remain confident in the long-term outlook for the cycling market. The strength of our overall performance is a clear illustration of the relevance of our service-led strategy and gives us the confidence to continue with our investment plans. We remain positive on our prospects for FY22 and beyond.”
Though the Halfords’ statement prefers a two year overview, which does still put the business 24.2% ahead against like-for-like assessment of the same period in FY20 there is no skirting the grim supply chain outlook, which at recent trade shows was the dominant theme of discussion.
Using that two year assessment cycling grew strongly, up +9.9% and 24.2% LFL, with Electric mobility up +115%. It is the supply of adult mechanical bikes that continue to be the thorn in the retailer’s side.
On the outlook the retailer writes:
“We expect many of the cycling supply chain issues referred to above to continue for some time albeit, as the UK’s largest cycling retailer, we are well positioned to navigate these challenges. Conversely, we are targeting strong growth in our Services and B2B businesses, alongside an improved Retail Motoring performance. We plan to continue investing in the initiatives highlighted in our FY21 Preliminary results on 17 June 2021. These include an investment in Retail Motoring pricing, Project Fusion trials, which seek to deliver a seamless, convenient, and consistent experience to our customers across a town, our Motoring Loyalty scheme, and scaling our network of garages and vans. We continue to target a full year profit before tax of above £75m on a post IFRS-16 basis.”