Major bike retailer posts profits despite 'downward trend' in cycling industry

Major online cycling retailer Tredz has recorded a profit in its latest accounts, bucking a trend of losses across the industry. 

The company's newly published financial report, covering the year to April 2023 and filed under Performance Cycling Limited, revealed a pre-tax profit of £1,438,843. 

The news comes after its key UK market competitors, Evans Cycles and Wiggle Chain Reaction Cycles, both posted deepening losses last year. The latter went on to enter administration in October, and was acquired by Frasers Group, the parent company of Evans Cycles, earlier this month. 

Tredz is one of the market leaders in premium bike sales in the UK, and is owned by Halfords, the country's biggest bike retailer. 

The wider picture of Tredz's annual accounts revealed a drop in revenue, following the Covid-19 boom, but showed profits above pre-pandemic levels. In 2019, the company recorded profits of £1,378,775m, up from under £1m the year before. 

Commenting on the accounts, director Jo Hartley said: "The decrease in revenue was the result of a softening in consumer demand due to lower consumer confidence with the cost of living crisis more prevalent in the second half of the year."

Hartley also noted that profits were negatively affected by "more promotional activity being required to generate sales". 

Price-slashing has been common across the bike industry as a measure to tackle high inventories following the pandemic boom. Brands and retailers, such as Canyon, Sigma Sports and Decathlon, have all offered cut-price sales. A leaked memo from the president of Trek earlier this month noted that the “market is in chaos”. 

As a result of wider industry struggles, the Tredz directors have adopted a precautionary going concern basis. Still, Hartley writes: "At the date of signing these accounts [1 March 2024], the company had adequate resources to settle its short and medium term liabilities as and when they fall due. 

"The directors have reached this conclusion after considering the adverse impact the current cost of living crisis is having on the industry the entity operates in and the current downward trend seen in the cycling industry."

"Having considered the risk of underperformance, the directors believe that adequate measures can be put in place for the company to remain profitable in the foreseeable future."

Tredz was acquired by Halfords in 2016 for £18.4m, and enjoyed its best financial year in 2021, at the height of the pandemic, when it posted pre-tax profits of almost £8m. 

News of the company's 2023 profits comes after Halfords issued a warning of "significant market deterioration". 

"The cycling market has become more challenging and competitive as it continues to consolidate,” the Halfords report read. The company's forecast “assumes the same challenging market conditions continue for the rest of Q4, including through our peak Easter cycling period in March."