Halfords pedals up profits as commuters get on their bikes

Halfords continues to defy the cycle with 2008 profits up to £92.4m, as Londoners take to their bikes.

Last Updated: 06 Nov 2012

That’s a 2.4% rise on the previous year - not a huge amount, but given the vicious trading conditions out there on the high street, it’s a pretty good effort all the same.

Halfords branches in the London area will probably be doing a roaring trade today, too. A 48-hr Tube strike has produced an army of red-faced first-time cycle commuters in the capital, more used to sweating on the Underground than panting their way round the north circular dodging buses and 38-tonne trucks on their way to work. Half of them will probably be riding bikes which haven’t seen the light of day for months or even years, so the demand for running repairs is likely to be high.

Halfords' market share is also up, although revenues at the 460-odd branch group fell slightly to £795m. Chief exec David Wild remains keen to keep a lid on expectations though, predicting a tough start to 2010 as a result of VAT rises and the prospect of peak unemployment.

There’s no doubt that Halfords has done well nationally out of the booming popularity of biking in recent years, and particularly from being one of the main suppliers for the government-backed Cycle 2 Work incentive scheme. It now claims to sell a third of all bikes sold in the UK. But cycling has not been an unalloyed success for the firm – earlier this year it closed all its stand-alone BikeHut cycle shops after a disappointing performance.

Halfords also claims to be doing very-nicely-thank-you from the credit-crunch-inspired resurgence in the popularity of camping, and from its old stalwart of car parts sales for similar reasons.

These stories about how well Halfords is doing have become a regular feature of the business landscape recently - the firm’s PR people are clearly milking the recession-busting-retailer angle for all they are worth. Analysts were rather less impressed by the results, with one saying that they ‘contained no nasty surprises, but no real excitement either.’

The truth is that Halford’s success – like that of most businesses – is probably down to a combination of good luck and good judgement. Luck in that it operates in a counter-cyclical market which naturally does well in a downturn. Judgement in that its management has been impressively fleet of foot, keeping sales on the boil by backing a succession of good earners and always keeping an eye on the next big thing. Hence it has done well out of sat-navs, bikes and now camping in recent years.

If it wants to make a killing today in the capital, it could do worse than arm its staff with oil cans, energy drinks and puncture repair kits and send them out to sit by the side of the road, so they can jump on the sweatiest cyclists.

In today's bulletin:

Is Northern Rock back on the block?
Setanta proving a turn-off for investors
Halfords pedals up profits as commuters get on their bikes
BP's top woman Vivienne Cox resigns
MT Special: Deborah Meaden on what makes a good entrepreneur

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