Halfords predicts bicycle boom to continue for 2020

Halfords expects strong demand for bikes to continue for the rest of the year after reporting a 57% rise in cycling-related sales during the coronavirus pandemic.

A desire to avoid public transport, as well as generally favourable weather conditions and a switch to cycling as a leisure activity during the UK lockdown, not only boosted sales of bikes but also demand for servicing. Sales surged nearly 42% at the company’s bicycle repairs and overhaul service in the 13 weeks to 3 July as the nation dusted off some of the estimated 7m old bikes resting in sheds and garages. Sales of electric bikes and scooters doubled.

Halfords said a government plan to hand out £50 vouchers for bicycle repairs, expected to be launched in the next few weeks, as well as a continued desire to avoid public transport will keep the cycling boom going. The company also said it expected a shift towards commuter bikes, as people return to work and the number of cycle lanes increases under the government’s £2bn investment plan.

Graham Stapleton, the chief executive of Halfords, said the retailer, and the rest of the industry, was struggling to keep up with unprecedented demand. Halfords is importing 100,000 bikes in the coming weeks as it tries to improve availability by shipping stock in from Europe as well as its usual sources in Asia.

He said: “This is not a normal demand curve. We are still not able to meet full demand from the market but week on week it is getting better. There is absolutely no evidence at all that we can see that the cycling trend won’t continue. Sales remain very strong.”

He said that in cities, where it is often not possible to make short journeys by car because of congestion and limited parking, and it is also currently difficult to use public transport because of the need for social distancing, bikes were becoming an essential rather than a discretionary purchase.

The trend for two-wheeled transport delivered a better than expected performance for Halfords in the three months to 3 July but did not fully offset the fall in demand for car parts as many vehicles remained parked up during the lockdown.

Group sales fell 6.5% at established stores in the period as motoring revenue dived 45.4% and trade at Halfords’ established Autocentre car servicing outlets slid 19%.

Online sales soared 200% year on year, helping offset a short period of closure at most stores, with some outlets still only partially open because of the need for social distancing.

The company warned it could fall to a £10m loss in the year ahead if overall falls in sales worsened to 9.5% and it continued to be more reliant on cycling-related trade, which is less profitable and more capital-intensive than motoring. In a best-case scenario the company said underlying profits could hit £20m, down from £53m in the year to April when sales remained stable at £1.1bn.