Halfords' profits hit by Sterling crash “headwinds” post-Brexit vote

Halfords, Britain’s biggest retailer of bicycles, says that the fall in value of the pound since June's vote to leave the European Union is causing “headwinds” that are increasing its costs and hitting profits.

Announcing its financial results for the six months to 30 September, the car accessories to bicycles retailer said that profit before tax and non-recurring items had fallen 12.1 per cent to £40.8 million, despite revenue rising 6.3 per cent to £567.3 million.

Chief executive Jill McDonald said she was “pleased with the momentum that is building as we implement our strategy, and that “the benefits for colleagues and customers are starting to come through.”

But she cautioned: “The depreciation of Sterling brings cost headwinds,” adding that the group had “developed a number of initiatives to mitigate the profit impact.”

Better weather this summer and a successful Olympics for Team GB’s riders – of whom Laura Trott is the latest to launch an eponymous range at Halfords – helped cycling performed strongly, with sales growth of 16 per cent from mid-August to the end of September.

> Halfords launches Laura Trott bike range

For the six months as a whole, like-for-like growth in cycling – which strips out the effect of newly opened or expanded stores, and businesses acquired during the year – were up by 4.6 per cent.

Halfords said “a strong performance during the peak Summer trading period more than offsetting the weather=impacted soft market conditions in April to June.

“The sales performance was driven by new ranges across kids and mainstream bikes, continued strong growth in premium bikes, and our competitive ‘20% off all bikes’ promotion.”

The company said that it was seeing strong sales growth in its Cycle Republic stores, with two new ones opened in Purley and Birmingham during the period, and that Tredz and Wheelies, which it bought in May this year, had seen year-on-year sales grow 25 per cent since then.

> Halfords buys Tredz and Wheelies

Those contributions helped push total sales growth for cycling in the six-month period to 15.4 per cent.

Halfords estimates its share of the UK bicycle market as now standing at 26 per cent, with 16 per cent for parts, accessories and clothing, and 10 per cent for cycle repair.

The company added: “We remain confident in the long-term growth prospects of the cycling market, and expect the cycling market to grow on average at 3-5 per cent per annum, driven by large scope for new cyclists as well as increased spend from existing cyclists.