Rainy summer hits bike sales at Halfords
- Credit: Newscast/Mathew Growcoot
Halfords today reported a slump in bike sales over the last two months amid rainy weather and heavy discounting.
The retail chain said cycling sales dropped 11% on a like-for-like basis over the eight weeks to August 28, marking a sharp reversal of the 2% rise seen in the group’s first quarter.
Halfords said it was hit by poor weather and high promotional activity, while the sales fall was also compounded by tough comparisons from a year earlier.
The result is a particular blow for the group, coming in its peak bike selling season. It said: “The disappointing cycling performance was primarily driven by mainstream bikes, as well as associated parts and accessories.
“We consider this to be principally market-driven, reflecting greater levels of discounting as well as poor weather deterring casual cyclists.”
Despite robust sales for other products and its car maintenance business, the poor cycling performance left overall retail sales 1.3% lower in the first eight weeks of its second quarter.
Halfords said half-year pre-tax profits were still expected to be “broadly” in line with market expectations as it keeps a tight lid on costs and thanks to better-than-forecast profit margins.
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Halfords said it was planning to overhaul its children’s bike and accessories range, while also launching “compelling offers” and ensuring staff are well trained in an attempt to shore up its bike sales.
It added: “Looking further ahead, we have an exciting pipeline of innovation for bikes and accessories and we remain confident in the medium and long-term growth opportunities in the cycling market.”
Halfords has enjoyed a bike sales boom in recent years, taking advantage of a surge in interest in cycling spurred by the success of ranges in collaboration with Olympic champions such as Chris Boardman and Victoria Pendleton.
Like-for-like bike sales jumped 11.4% in its last financial year, helping annual revenues top £1billion for the first time.
The disappointing second quarter bike performance presents a headache for new chief executive Jill McDonald early in her tenure, having only joined in May after leaving fast food chain McDonald’s where she was the UK boss.
She said: “This recent weakness in our cycling sales is disappointing, but it comes after two years of very strong growth in the category and has been partly offset by strong growth in both car maintenance and car enhancement sales, which is a testament to the balanced nature of the business.”
Figures for the recent eight week trading period shows a 7.3% rise in car maintenance sales, while the group posted a 4.7% rise for car enhancement and 1.8% increase for travel solutions.
Ms McDonald, who replaced Matt Davies, will unveil further plans for the group’s cycling range as part of a wider strategy update when Halfords reports its half-year results on November 12.
Mike Dennis, retail analyst at Cantor Fitzgerald, said cycling was still a strong area for Halfords in spite of the summer’s washout performance.
“Halfords is still gaining share in the £1bn cycling market, at 20.3%, and is selling more premium bikes due to the trend of men and women taking up competitive road and endurance cycling,” he said.