Electric cycle and scooter boom sees profits charge up at Halfords
Surging sales of electric bicycles and scooters amid the pandemic has helped Halfords rack up a 72 per cent jump in annual profits.
The cycling and motoring accessories chain reported underlying pre-tax profits of £96.3 million for the year to April 2, up from £55.9m on a pro forma 52-week basis.
Retail sales jumped 14.6 per cent on a like-for-like basis – helped by a 54 per cent surge for bikes – while its Autocentres car servicing and repair chain enjoyed a 9.7 per cent hike.
The group saw soaring demand for electric scooters and bikes, with sales in this category almost doubling – up 94 per cent.
The firm is investing heavily in the area of electric vehicles and will have trained more than 2,000 of its store and garage staff to service electric cars, bikes and scooters by the end of its new financial year.
Halfords said it is “positive” over the outlook as it expects restrictions on foreign travel to boost staycation goods sales, such as touring and cycling products, while it sees motoring product demand benefiting from more normal traffic patterns. It sees statutory profits rising to more than £75m in 2021-22, up from £64.5m in the year to April 2.
But Halfords warned of “acute” ongoing supply issues with bikes, which have been affected by demand, Brexit trade concerns and the blockage of the Suez Canal earlier this year.
It told investors: “The general economic outlook remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases. We will address this by making a significant investment in pricing in our retail motoring business.”
Sales in the first nine weeks of the new financial year have remained solid – up 6.6 per cent for retail motoring, 42 per cent for cycling and 6.6 per cent across its Autocentres against pre-pandemic levels two years ago.
Susannah Streeter, senior investment and markets analyst at financial services group Hargreaves Lansdown, said: “As getting ‘on yer bike’ became a pandemic past time, Halfords has had to keep all muscles pumping to keep up with demand for new models and accessories.
“But supply chain issues have stopped growth from shifting into an even higher gear with the company having difficulties getting hold of the right stock.
“Halfords reckons those issues aren’t going to disappear over the hill any time soon, and the timing of a return to normal trading patterns remains highly uncertain.”
Freetrade senior analyst Dan Lane noted: “Cycling was one of the few things we could do for our one daily exercise slot last year. And the resultant biking boom has really accelerated profits at Halfords.
“The good thing for the firm is that it might not be as much as a flash in the pan as we think.”
Halfords chief executive Graham Stapleton said: “Demand for our services remains strong in the new financial year, and our touring categories are currently performing particularly well given the trend towards staycations this summer.
“In the longer term, we remain confident in the future prospects for the UK’s motoring and cycling markets.”