Supply chain woes dent cycling sales at Halfords: reaction
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The car parts and bikes retailer and maintenance group posted a 22.8 per cent year-on-year fall in like-for-like bike sales in the 20 weeks to August 20.
It saw strong growth in bike sales over the first half of the period, but noted that a shortage of bikes - in particular adult models - contributed to "materially" slower growth towards the end of the 20 weeks.
On a two-year comparison, bike sales were 24.2 per cent higher than pre-pandemic levels.
In a trading update to investors, Halfords said: "The global cycling supply chain continues to experience considerable capacity constraints, leading to low availability of bikes throughout the period."
The group cautioned it expects the bike supply issues to "continue for some time", adding that it faces wider industry challenges including a shortage of lorry drivers and car service technicians, supply chain pressures, factory production constraints and cost hikes.
Halfords added that staffing issues across its car maintenance garages and mobile expert vans due to hiring difficulties, the so-called pingdemic and self-isolation rules also had an impact on its autocentres' performance, though the division still saw sales rise by 26 per cent as motorists returned to the road as restrictions eased.
A strong performance from the group’s retail motoring ranges amid the trend for staycationing helped offset the challenges, pushing overall retail sales up by 7.6 per cent on a like-for-like basis while total group sales lifted 10.8 per cent.
Chief executive Graham Stapleton said: "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.”
Sophie Lund-Yates, equity analyst at financial services group Hargreaves Lansdown, said: “Halfords’ full-year profit ambitions remain on track, but there are some things to consider.
“Cycling is a real growth opportunity, but the group is being held back by supply chain problems.
“Not being able to offer the right stock, or enough of it, is inevitably putting a lid on progress in the division. These are unlikely to be resolved soon.
“The other thing to keep in mind is that staycations are likely going to become less popular as and when the world gets back to normal. What this will mean for sales in the next summer season is yet to be seen.”
Russ Mould, investment director at AJ Bell, noted: “Supply chain problems would suggest getting hold of a new bike will continue to be tough well into 2022.
“Halfords says children’s bike availability is better than adult bikes, which should mean it can still capitalise on the seasonal spike in demand around Christmas.
“But otherwise, there isn’t a lot more the company can do apart from try and encourage people to buy electric bikes where there is some product availability. The problem here is the high price point.”