Halfords, Britain’s greatest bicycle and motoring elements retailer, has been a beneficiary of lockdown because the nation received on its bike and used its automotive to take home holidays.
On Thursday the corporate expects to report a surge in pre-tax income to between £90m to £100m for the 12 months to April, beating analysts’ £70m estimates. Its income have been slightly below £56m final 12 months and £59m in 2019.
And the traits which have boosted gross sales at Halfords over the previous 12 months are set to proceed. With ongoing uncertainty about journey overseas, many individuals will likely be holidaying within the UK once more this summer season. It will enhance demand for bikes and equipment, but in addition for automotive elements as households select to drive to a British vacation vacation spot.
Youthful folks specifically have caught the biking bug, with half of 18- to 29-year-olds aspiring to cycle extra, in accordance with a survey of 500 folks by RBC Capital Markets. This compares with 40% of all adults who say they need to be fitter and more healthy. Extra folks have taken up biking as a pastime over the previous 12 months, as lockdowns left roads briefly abandoned, and lots of are additionally commuting to work by bike – or planning to – to keep away from public transport.
Halfords is within the fortunate place of getting a foot in each the bicycle and the motoring elements markets, with has a 20%-25% share of every, which collectively whole £5.5bn.
Electrical bikes and scooters have been its greatest sellers prior to now 12 months, and e-bikes are typically thrice the value of regular bikes. The upper-end bicycle retailer Tredz posted 60% development in like-for-like gross sales over the past Covid lockdown – within the first seven weeks of 2021 – and gross sales of conventional children’ and grownup bikes have been additionally robust, up 43%.
Halfords’ storage and cell van servicing enterprise additionally carried out nicely, regardless of a 40% drop in automotive journey in contrast with pre-pandemic ranges, as folks received their automobiles serviced earlier than the reopening of outlets, bars, eating places and cultural venues.
Most bicycle retailers have had to deal with lengthy ready lists for some machines. Halfords, which imports its bikes from Europe and Asia, has had bother maintaining with hovering demand throughout the pandemic.
It faces mounting on-line competitors for gross sales from the likes of Amazon, health gear retailer Wiggle and on-line spares distributor Euro Automobile Elements, and has determined to shift its focus to providers in the long term. Halfords now runs 404 shops and 374 autocentres: it has closed about 70 websites in latest months and bought half of its 22 loss-making Cycle Republic shops. It has expanded to 143 its fleet of cell vans – which drive to folks’s houses to service their automobiles – and has been hiring technicians, MOT testers and drivers.
The corporate sees a profitable alternative in servicing electrical automobiles, bikes and scooters, and has launched into a significant coaching programme for its mechanics. In the mean time, 1 / 4 of its garages have technicians certified in electrical automobiles.
It additionally has an opportunity to shine within the £9bn automotive servicing and aftercare market, of which it at present has a 2% share, in accordance with RBC.
“We see a possibility on this market from the expansion in electrical automobiles, on condition that Halfords will most likely be capable to put money into the coaching required to service electrical automobiles, whereas this will show too expensive for smaller garages.”
With rising on-line competitors, Halfords could not have a lot alternative.
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