Retail chain Halfords has recorded a 25% year-on-year fall in profits, citing a “decline in cycling” as a contributing factor.
In an accounts filing made last week, the company posted a pre-tax profit of £42.7 million in the year to 29 March 2024. The same period the previous year brought profits of £54.8 million.
This drop, according to chief financial officer (CFO) Jo Hartley, was due in part to a "very challenging" cycling industry.
“In cycling, whilst we grew market share, the market itself was very challenging, with market volumes declining 4%,” Hartley wrote in an accompanying statement. “Cycling market volumes, as reported by the Bicycle Association, are now c.30% below pre-covid levels.”
The CFO went on to explain that discounting on cycling products had a “dilutive impact" on the company's gross profits. This figure, which covers income before administration and distribution costs are factored in, fell by 3% year-on-year, down from £468.9 million to £455.2 million.
Gross profits were also hampered by increased operating costs, “notably in energy costs and salary expenses”, Hartley wrote, due to inflation and rises in the national minimum wage.
Known too for its motoring products, Halfords is considered to be the most prominent brand in the UK cycling industry. It sells a range of bikes, including in-house brands Boardman and Carrera.
The accounts reported on in this article cover the trading activity of the retail chain Halfords, which operates in 377 stores across the UK. The chain is a subsidiary of the overall Halfords Group Plc, which encompasses a number of automotive, leisure and cycling brands.
The parent company, Halfords Group Plc, shared its accounts for the same period earlier this year, also recording a “significantly worse than expected” performance in the cycling market.
Last month, Halfords Group Plc released a trading update covering the period after the accounts. It highlighted that this year counted “the UK’s wettest spring since 1986”, which brought continued challenges in the cycling market.
The update did, however, note a “positive reception” for Halfords’ new premium bike ranges. In September, the company revealed it is more than doubling its offering of premium bikes, which it defines as those costing £1,000 and more.
“The new range of bikes from Halfords is a clear statement of intent to the premium cycling market. It’s one of the fastest growing sector but one which was underrepresented at Halfords,” the brand's head of cycling, Katie Begley, wrote.
Among the new bikes released was the Boardman ADV 9.6, a gravel bike with a £3,800 price tag.
