A boom in cycling during the pandemic has helped Halfords double half-year profits – but it warned that the latest lockdown is taking its toll as demand for car parts sinks.
The group reported a pre-tax profit of £55.4m for the six months to 2 October compared to £27.5m a year earlier, helped by a 55% surge in like-for-like sales of cycling-related products.
Halfords scrambled to secure more stock from suppliers during the period as it faced “unprecedented demand” and admitted that at times availability had been “limited”.
The company had already flagged the scale of demand, and bumped up profit expectations, last month.
Meanwhile, motoring revenues fell by 24% as the initial lockdown took its toll though there was a pick-up as restrictions eased and consumers made plans for UK staycations over the summer.
Halfords revealed that at its chain of autocentres – where sales have also come under pressure due to the lockdown – it will be investing in more electric vehicle technicians as the switch away from petrol and diesel vehicles accelerates.
The group said that sales since the start of October remained “relatively strong” but that since the start of the lockdown in England on 5 November there had been “some impact on trading”, with data showing car traffic at 70% of pre-COVID-19 levels.
Halfords stores, classed as essential by the government, have remained open during lockdowns but it has also enjoyed a surge in online sales – up 148%.
Chief executive Graham Stapleton said: “We are very pleased to have achieved such a strong first half performance against the backdrop of one of the most challenging trading environments in recent history.
“We have worked hard to capitalise on the cycling market tailwinds by sourcing more stock from existing and new suppliers, as well as launching new products and brands to serve the high level of demand for our cycling products and services.”
Jonathan Rock, retail analyst at GlobalData, said: “Halfords has emerged as a clear beneficiary of the pandemic so far, supported by trends such as a long-lasting cycling boom and the staycation fashion.
“However, the retailer has stressed its concern over the rest of the year – failing to give profit guidance for its second half – as the latest lockdown coincides with the seasonal fall in cycling and motoring demand.”
Shares fell 4.6%.
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