It's four wheels bad, two wheels good at Halfords

The car and cycle parts retailer has profited from a sudden enthusiasm for cycling among consumers. Leg-power being cheaper than petrol...

by Emma Haslett
Last Updated: 06 Nov 2012
Who’d have thought that an effect of fuel prices rising by 15% year-on-year would be to cause the world’s third-most obese nation to develop a sudden passion for pushbikes? Strange, but true. In fact, according to Halfords, people’s enthusiasm for two-wheeled travel has helped to offset falling expenditure on car maintenance and pushed up its sales by 0.3%. Although, as shareholders have made clear, that’s not an awful lot….

According to Halfords, sales of bikes and bike accessories jumped by 11.5%, driven by the popularity of ‘premium’ bike brands like Voodoo and Boardman, the most popular models of which are priced somewhere between £500-£1,500. But despite cycle-mania hitting the streets, it hasn’t been enough to impress analysts: Credit Suisse says it expects ‘some pressure’ on profits, which are currently forecast at £112m. And the City has been underwhelmed by that modest sales rise, with Halfords share price down as much as 7.3% this morning.

Interestingly, people are now so unwilling to shell out on their cars that they’re actually putting themselves at risk: while the average mileage is now down by between 1-2%, ‘instances of tire baldness’ have apparently risen by 11% year-on-year, and people are even more likely to wait until the light goes on before they check their oil. That’s also reflected in the types of service people are going for: according to Halfords, people are more likely to save by only paying for an interim rather than a full service.

Of course, that’s bad news for Halfords’ Autocentres (which, having only been acquired last February, are still a fairly recent addition to the company). Nonetheless, sales at the 220 centres rose by 2.1% during the period; CEO David Wild reckons that some savvy marketing helped it to take market share from independent garages – which is great, unless you own an independent garage.

Still, Wild seemed reasonably positive about the company’s prospects, saying that it remains ‘confident’ in its potential to carry on generating cash. Which, we presume, means yet another upsurge in be-lycra’d bike nerds on Britain’s roads over the next few months. Watch out…
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Finance Retail

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