Halfords’ cycling sales jump 57.1% as people avoid public transport amidst COVID-19

Halfords’ cycling sales jump 57.1% as people avoid public transport amidst COVID-19
Written by:
Wajeeh Khan
7th July, 11:02
Updated: 7th July, 11:08
  • Halfords' cycling sales jump 57.1% as people avoid public transport amidst COVID-19.
  • The British retailer estimates an up to £10 million of pre-tax loss in fiscal 2020-21.
  • The Redditch-based company says it has £235 million of liquidity.
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Halfords (LON: HFD) said on Tuesday that its underlying cycling sales came in 57.1% higher in the recent quarter. The company attributed the increase in sales to the Coronavirus pandemic that pushed people into avoiding public transport on recommendation of the British government in the past few months.

Shares of the company tanked about 9% on market open as Halfords gave a dovish outlook on profit. At 166 pence per share, the British retailer is roughly 2% down year to date in the stock market after recovering from a low of 51 pence per share in March. Learn more about how to choose winning stocks.

Halfords expects a 9.5% decline in comparable sales

In the worst-case scenario, Halfords said, it expects a 9.5% decline in its comparable sales in fiscal 2020-21. The British retailer of car parts and bicycles estimates an up to £10 million of pre-tax loss as compared to a £55.9 million in underlying pre-tax profit last year. Halfords recently appointed a new managing director for Tredz.

Halfords was branded as an essential retailer by the British government as it exempted the company from the countrywide lockdown that was imposed in March. As of 3rd July, Halfords operates 359 stores in the United Kingdom.

As per the group, fair weather also contributed to the boost in cycling sales as people switched to cycling as a leisure activity for better health.

In Q1, Halfords’ like-for-like sales came in 6.5% lower. The robust performance of its cycling segment was pushed to the background as its higher-margin motoring division registered a massive 45.4% decline due to COVID-19 that curbed car journeys.

Halfords has £235 million of liquidity

The Redditch-based company withdrew its full-year financial guidance on Tuesday citing the rising Coronavirus uncertainty. In a bid to shore up finances amidst the pandemic, Halfords resorted to cancelling its dividend, slashing non-essential expenditures, and benefitting from the state-backed wage support schemes.

The British retailer said it had £235 million of liquidity on Tuesday. Despite COVID-19 uncertainty, however, CEO Graham Stapleton expressed confidence that Halfords’ prospects in the long-term were still bright.

Halfords’ performance was also reported downbeat in the stock market last year with an annual decline of about 35%. At the time of writing, the British retailer of car parts, tools, car enhancements, touring and camping equipment, and bicycles has a market cap of £330.93 million and a price to earnings ratio of 7.98.

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