Halfords set to see profits almost double as public transport ditched for bikes

Halfords’ profits are set to almost double for the past year after people shunned public transport in favour of bikes and cars during the pandemic.

The cycling and motoring specialist is set for another bumper trading announcement when it updates company shareholders on Thursday June 17.

It is expected to reveal a pre-tax profit between £90 million and £100 million for the year to the end of April.

The bumper profit, which will also take into account the £10.7 million it is repaying in furlough, compares with a £52.6 million profit for the previous year.

Bike sales have benefited from pandemic trends as Britons chose to cycle more when travelling during lockdown periods while health and fitness has also been a priority for many.

Halfords financials
Halfords has shrugged off supply disruption amid the soaring demand for new bikes (Yui Mok/PA)

Investors will be hopeful that staycations and a desire to have healthier commutes to work will keep the strong momentum over the current financial year.

Analysts at RBC said: “Near term, we expect that the pandemic will continue to remain supportive for both sectors, as consumers look to avoid public transport and instead prefer to use their own cars and bikes, particularly during staycations.

“Longer term, we expect a strong consumer shift towards healthier living to be supportive for the cycling sector, as consumers aim to be more active, for example by cycling to work.”

However, the boom in bike sales has also placed significant pressure on supply, which has also been significantly disrupted by Brexit trade concerns and the blockage of the Suez canal earlier this year.

Nevertheless, the company’s recent transformation plan is expected to have bolstered its supply chain and secured significant cost savings.

The strong cycling performance is also expected to take some pressure off the group’s retail motoring business, which had seen demand weakened by Government advice not to travel far during initial lockdown periods.

Investec’s Kate Calvert said it is “likely” the group’s recent positive trading will result in a resumption of dividend payments for the past year but added that profitability could dip next year as lockdown trends vanish.

She said: “We conservatively forecast full-year 2022 profits to decline year-on-year as it is impossible to call how long the strong cycling demand may continue for, where the market could fall back to and whether the rebound in more profitable retail motoring will be strong enough to offset any weakness in cycling demand.”