Booms in cycling and staycations prop up Halfords

Following today’s release of Halfords’ figures for the 20 weeks ending 21 August 2020, Jonathan Rock, Retail Analyst at GlobalData, a leading data and analytics company, comments:

“Consumer demand for bicycles remains high as consumers shun public transport and seek healthier lifestyles as a result of the pandemic. This, along with a rise in staycations and subsequent demand for motoring products and services, has propelled growth for Halfords through the summer. In the seven weeks since Q1 ended (which translates to July and most of August), group revenue surpassed the retailer’s expectations, and profit guidance for H1 now stands at between £35 and £40m.

“For the total period reported (20 weeks to 21 August), Halfords boasted l-f-l group revenue of 5.0%. Strong cycling results of 59.1% l-f-l growth over the period were offset by a double-digit decline in motoring (a consequence of limited car use over lockdown). Although motoring has performed better in August, with l-f-l growth up 7.1% in the three weeks to 21 August.

“Having launched its new website in February, Halfords was able to fully benefit from the surge in online sales seen across retail, with online revenue up 160% and representing 54% of total revenue over the period. With the retailer claiming to have tripled investment in development of their online platform, it is well positioned to maintain this growth.

“Autocentre revenue increased 30.2%, significantly boosted by previous acquisitions of McConechy’s and Tyres on the Drive which greatly increased the scale and reach of Halfords’ motoring services. Its Mobile Expert Vans, a unique and popular at-home motoring service, continues to grow as 16 more vans were added, making a total of 91. Cycling services saw similar success with 17.5% growth overall and 48% in the seven weeks to 21 August, boosted by the Government’s Fix your Bike Voucher Scheme and Halfords’ free bike check. In such a fragmented market, Halfords’ strong growth is a promising sign for future acquisitions.

“However, with the cycling and staycation booms likely to deteriorate over winter just as political and economic turbulence peaks, the future looks uneasy. Its specialist status will help ward off encroaching value-based retailers, but nonetheless, the retailer should lower prices as consumer spending tightens significantly. Halfords must emphasise its expertise, as consumers seek to maintain their motoring and cycling products rather than upgrade to avoid big purchases during economic turbulence.”

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