Bike boom during pandemic to lift trading at Halfords

A surge in demand for bikes during the pandemic is set to provide a major boost to Halfords as it unveils its performance over the past year.

Analysts have predicted that soaring bike sales have buoyed the retailer during the lockdown period, with suggestions that its motoring division could also be on the road to recovery.

On Tuesday July 7, the stalwart motoring accessories and bike retailer will tell investors how it traded over the past year to June, although there will be particular focus on its performance throughout the lockdown period.

In May, the group revealed trading was ahead of expectations in the four weeks to the start of May, as sales fell 23% on a like-for-like basis against the same period last year.

Halfords was particularly strengthened by high demand for bikes and parts, with the Bicycle Association trade body noting a 50% surge in bike sales in April.

As more people return to work and Government guidance continues to suggest that people avoid public transport, the company’s motoring division is expected to recover in the coming months.

Analysts at Liberum said they believe that its “motoring services may well have held up better than anticipated”.

Adam Tomlinson from the brokerage said: “We think the market has probably been too cautious about the performance of motoring and particularly autocentres over the near-term.

“With guidance for the public to still avoid public transport where possible, private vehicles (alongside cycling and walking) has remained one of few travel options.”

He added that the group could see a further sales boost in August due to the reintroduction of compulsory MOTs.

Nicholas Hyett, equity analyst at Hargreaves Landsdown, said he believes its mix of autocentres, cycle retail and online investment “make it better suited to compete in a digital first world than most retailers”.

“However, sales are only one half of the equation and our real focus at these results will be cost control and cash conservation,” he added.

“A large leasehold retail estate and accompanying staff costs mean some costs are unavoidable.

“But if the group can keep exceptional costs associated with moving to a socially distanced operating set up to a minimum it will have done well.”