Halfords remains “very, very confident” about cycling market, despite overall annual profits falling by 55 percent

Halfords’ chief executive says the company remains “very confident” about the cycling market, despite the UK’s largest retailer of cycling products and services suffering a 55 percent fall in pre-tax profits as the bike industry continues to struggle due to inflation and the cost-of-living crisis.

Publishing its preliminary results for the 52 weeks to the end of March, the retailer announced an overall pre-tax profit of £43.5 million, down £53.1 million versus the 2022 financial year.

The company cited inflationary pressures and a tough comparison against the previous year (which was up by 57.8 percent compared to the year prior to the Covid-19 pandemic) as the primary reasons behind the drop.

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While the war in Ukraine had acted as “a catalyst to already increasing inflation”, Halfords noted that the “volatile political and economic environment” last autumn hit sales of big-ticket, discretionary items such as bicycles.

Though the retailer also reported that its revenue grew by 15.3 percent to £1.59 billion last year, two of its core markets, tyres and bikes, faced a “significant downturn”, with the cycling market – which has suffered a difficult year throughout the UK – down 24 percent compared to 2020 levels.

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Nevertheless, Halfords’ chief executive Graham Stapleton has forecast a return to growth over the year ahead – pointing out that they have already experienced a “strong start” to the new financial year – while maintaining that the bike market “is the right place to be”.

“We’re very, very confident about the cycling market in the mid-term,” he said. “It still hits the sweet spot in terms of climate change, for example, and there is a big growth spill into electric bikes. We still think it’s the right place to be.”

The 55-year-old also noted that the cycling industry could soon be aided by a reduction in inflationary pressures.

“While the costs of energy, labour, and currency remains high, we do expect to see some deflation in cycling and rubber-based products. We’re also going to see freight costs fall,” Stapleton said.

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The 24 percent fall in Halfords’ cycle market supports figures published in February in the Bicycle Association’s Annual Market Data Report for 2022, which showed that UK bike sales have fallen to their lowest level in 20 years.

Combining sales figures and other data, the Association’s research suggests that mechanical bike sales fell by 22 percent in 2022, down to 1.8 million units and 27 percent below pre-Covid levels.