Halfords jumps 26% as the government recommends people to cycle to work

The British government started easing the Coronavirus restrictions on Monday and recommended people to use bicycles to commute to work. Following the announcement, the Redditch-headquartered retailer of bicycles and car parts, Halfords Group (LON: HFD), was reported around 26% up in the stock market.

Transport minister of the United Kingdom, Grant Shapps, stated on Saturday that the public transport will resume full service from Monday. In compliance with the social distancing measures, however, public transport will have the capacity to cater only 1 passenger out of 10 in multiple parts of its network that marks a massive 90% decline as compared to its capacity before the pandemic.

UK to adjust road infrastructure to accommodate more cyclists

Shapps further added that companies should still prioritize work from home arrangements where possible. Employees that must report to work, Shapps said, should resort to walking or cycling instead of driving their cars to work or taking public transport.

The transport minister also expressed plans of adjusting the country’s road infrastructure to accommodate an increase in cyclists. Shapps also announced that E-scooter trials are also expected to begin in June.

Halfords is the largest cycling retailer in the United Kingdom. With a countrywide network of 450 repair centres, its market share is currently at around 25%. Halfords is also a prominent name in the league of E-scooters.

Halfords’ campaign on Monday was targeted at around 7 million adults in Britain with rotting bicycles in their garages or sheds. The company pledged a free of cost 32-point check on the decaying bikes to help people commute conveniently to work after the COVID-19 lockdown.

Cycling makes up 2% of the total commutes in the UK

As per Halfords, commutes via bikes account for only 4% of the total journeys in the United Kingdom with cycling making up an even lower 2% of it. In contrast, people in the Netherlands use bikes for roughly 27% of the total commutes.  

In March, the retailer suspended its dividend and warned of a 25% decline in sales in 2020-21.

At 183 pence per share, Halfords is currently around 7% up year to date in the stock market after dropping to 52 GBX per share in March. Its performance in 2019, on the contrary, was reported fairly downbeat with an annual loss of around 35%.

At the time of writing, Halfords is valued at £363.70 million and has a price to earnings ratio of 8.77.