Publishing its preliminary financial results for the year to March 2024, Halfords has seen its profits slashed amid “significantly worse than expected” cycling performance and bike sales dropping to 30 per cent below pre-Covid levels.
The major retailer, the largest provider of cycling sales and services in the UK, highlighted the “high-profile failure” of Wiggle Chain Reaction as evidence of the “challenging” market and noted that “significant pressure” was being felt due to widespread industry sales.
Halfords reported its cycling volumes were down four per cent compared with the previous financial year, “far behind” the forecast, with the now-familiar “worse than anticipated headwinds” — namely, the cost-of-living crisis, inflation, low consumer confidence for big discretionary purchases, and poor spring weather — all blamed for contributing to the “very challenging market conditions” facing the bike industry.
Overall, Halfords’ pre-tax profits fell by 18 per cent to £36.1 million, the retailer’s ‘Autocentre’ car servicing offering named as “the star performer again”. CEO Graham Stapleton conceded that the short-term outlook “remains challenging”, with cycling sales expected to slump further over the next 12 months, but concluded that given the company’s profitability during a time of significant headwinds the business is “well positioned for profitable growth” in the future.
Looking at cycling specifically, the four per cent decline on 2023 was “significantly worse” than the predicted one per cent drop. “Low customer confidence in the ongoing cost-of-living crisis has further impacted demand for big-ticket, discretionary items such as bikes. Another year of decline leaves bike market volumes c. 30% below pre-Covid levels,” the report states.
Halfords also pointed to the cycling industry continuing to “consolidate quickly” — a reference to Wiggle being bought by Mike Ashley’s Frasers Group, the retail group that already owns Evans Cycles and Sports Direct — as another reason why the cycling industry has become “more challenging and competitive”.
Wiggle’s “high-profile failure” was, Halfords says, a demonstration of the “much broader challenge” facing cycling businesses in the UK.
As widely seen elsewhere in the industry, Halfords introduced major sales on cycling goods in recent times, promotional participation up a third compared with the previous financial year. That, combined with more customers purchasing on credit, has lead to “significant pressure on gross margins”.
Halfords says it “further cemented leadership of the UK cycling market” and also reported its Cycle2Work revenue had risen 8.3 per cent year-on-year. Likewise, likely aided by Wiggle’s demise, Halfords-owned online retailer Tredz saw sales rise 11.1 per cent.
While Halfords expects its cycling market to slump even further over the next year, the retailer said it expects “to emerge in an even stronger position once market conditions normalise”.
> “Criminal-level abdication of duty” – Halfords slammed over non-tightened stem bolts
The cycling giant’s £36.1 million pre-tax profit was in line with the downgraded profit forecast it had predicted at the start of the year, news that prompted Halfords’ share price to plunge 25 per cent back in February.
Last year, amid poor cycling performance, the business said it would focus on “needs-based” sources of revenue, such as cheap motoring repairs, in a bid to fill the gap left by “discretionary” spending areas, such as cycling and car cleaning, which were “adversely affected by unfavourable weather and low consumer confidence”.
The noises last June were, however, that in the long term Halfords remains “very, very confident” about the cycling market. “Cycling still hits the sweet spot in terms of climate change… We still think it’s the right place to be,” the retailer’s chief executive Stapleton said at the time.
Those comments came a year after, in June 2022, the company warned of a “considerable softening of the cycling market” following its pandemic boom, with supply chain disruption and inflation beginning to bite.
28 thoughts on “Cycling market “significantly worse than expected”, Halfords warns — with “high-profile failure of Wiggle” and widespread sales evidence of “another year of decline””
How is a competitor going out
How is a competitor going out of business an example of the industry getting more competitive? An indication of it, maybe, but surely not an example of it.
In other news, “Van Riesel’s
In other news, “Van Riesel’s £9,000 RCR Pro team edition replicas sold out in minutes“…
Looking for a new bike 4 months ago, all the models I was interested in were sold out (one of them was from Decathlon, about 1/10th of the price of the VR RCR), I had to order online, shipped from a foreign store.
Anyway, it seems the market is all about e-bikes now, not sure if this announcement includes these sales, too?
The odd thing with E-bikes is
The odd thing with E-bikes is that I’m definitely seeing more and more on the roads, but they are all the illegal non-pedal variety. I’m not seeing many that are maybe chipped so that someone can get power while pedalling above the 15.5mph lmit. Where are people even buying them from? Definitely not places like Halfords.
My old local bike shop (GB Cycles) no longer exists sadly. One of the last times I went there I was told how the average person replaces their bike every three years. I don’t know what the reality is, but I’d imagine a lot of people already have bikes and simply don’t see a need to replace them. The only reason I replaced my 14 year old Specialized Roubaix commuting bike last year was because of being involved in a crash cycling home from work. Otherwise it was fine and I’d still be using it today.
I think the bike industry has a small core of hardcore racing types who are buying bikes regularly, as well as new kit every year. The average cyclist will likely stick with a bike for many years and wear that old winter jacket for as many years as they can before buying a new one, especially when a replacement isn’t cheap. I’d replace my old Specialized Tahoe shoes, which are definitely close to end of life, but with options seemingly £100+ I will squeeze every last bit of juice that I can out of them first.
Illegal electric mopeds –
EAPCs (legal “ebikes”) are a massive growth area apparently. Just win for the market – higher unit price, likely more profit, probably more people buying them, shorter time until obsolescence (perhaps not planned – but it will be), less possible user maintenace – what’s not to like?
There are clearly good points to EAPCS. There are also several that I don’t think represent an “improvement”… (here’s an interesting thought for example, then there is a suggestion that they contribute to an elevated risk for older people, though I think statistics are still being argued). That’s like trying to campaign against hot cakes and fries though!
Illegal electric mopeds – perhaps people are buying them direct from firms on t’net (as illustrated by Ashley Neil – for once hitting a note I can approve of – with this bike “review”)? And there are the “stick an electric motor on” conversions too.
Not sure about shops and bikes, but for example Currys / PC world locally was happily offering scooters (not legal on roads) at essentially any power you liked. Also online. AFAIK it’s completely legal for them to sell ’em – it’s on the user how they use it. BUT OTOH (and I don’t want to be unfair – I didn’t ask a salesperson) – I saw no information about the legality of this. They’d limited max speed apparently but neither that or the power are relevant! Because they are not legal on roads etc.
I’ve not examined them but by far the most frequent ones I see in Edinburgh *appear* to be are going at speeds consistent with them being legal (not sure about throttle but they’re being pedalled when I see them). They’re rented from this concern.
Now, whether they’re well maintained (given riders are incentivised to ride them ’till they fall apart), or whether riders are riding them in a legal or sensible way, or if we should be essentially ignoring what the market is doing in this sector? Or indeed the whole business model of the recent “delivery” sector (mostly the food delivery firms with their “certainly not employees” – in fact pretty much everything except for the established cycle couriers / cargo bike delivery groups)? That is a gigantic vermarium!
squired wrote:
Probably Amazon, they’ll happily sell you an “E-bike” with 2kW of power that will do 30mph.
Probably Amazon, they’ll
Probably Amazon, they’ll happily sell you an “E-bike” with 2kW of power that will do 30mph
Easy problem for the police to solve- confiscate a few of these £1400 illegal bikes in an easy operation within cities, and the problem goes away. They’re easy to see in Preston centre. Unfortunately, the police don’t want to solve that problem.
Tom_77 wrote:
Love this review: “this feels like a motorbike”, well yes Ross, that’s because it IS a motorbike…
I’ve just filled in the
I’ve just filled in the amazon complaint form.
I think you’ll get the same
I think you’ll get the same reply that I got from Amazon over a complaint about this driver – none.
https://upride.cc/incident/ld71uom_amazonprime_handheldmobilephone/
At least the potential buyer
At least the potential buyer should know the bike is illegal in the uk.
Unless they supress my review.
The root problem, as always,
The root problem, as always, is the police and their institutional hostility to cyclists, tolerance of offences against cyclists and their enthusiasm for a policy of doing nothing at all about any offences related to cycling. Consequently, everybody knows that the police are permanently looking the other way when passing illegal bikes, scooters etc
The ones I see look so
The ones I see look so obviously illegal, like full blown near motorcycle looks & performance, I’m amazed they kind of get away with it.
For me personally I wouldn’t look to buy new bikes more than once every 10 years, and then usually only because it’s uneconomical to keep replacing bits at that stage.
Certainly wouldn’t be buying a new bike every 3 years.
squired wrote:
That is excellent news, thank you. My bike is over 3 years old, therefore due for replacement! 🙂
Jem PT wrote:
Can you post a video of your “financial controller’s” response when you try running this past them for approval
Just looked back and although
Just looked back and although I wouldn’t have put myself in this category, I have indeed bought a new bike at least every 3 years since I go back into cycling. What does “replace” mean though?
Replace their bike every
Replace their bike every three years!! Ouch. I replaced both my road and MTB over the last two years but my previoues ones were 20 and 17 years old respectively. I must admit I wish I had done it sooner, but i can’t imagine a world where I could afford to it every three years.. And that;’s an average?!
cardch wrote:
I own two bikes. One is 12 years old and was the first bike I’d ever bought. The second one I got second-hand and is 31 years old.
I don’t expect to buy a new bike any time soon…
I miss GB Cycles. They were
I miss GB Cycles. They were my go to for replacement Campagnolo parts (the small bits that save you buying a new shifter or whatever). I am aware my trade was never going to be enough to keep them going.
As an aside I went on the reborn Wiggle yesterday. The expected infiltration of $h!te from Sports Direct and Evans is well underway
From some of the latest data,
From some of the latest data, the biggest drops in sales are in the types of bikes that often don’t get ridden, i.e. lower priced bikes that people buy, ride once on a holiday at centre parks or something like that and then park in the shed for 10 years gathering spider webs and rust.
Basically, the people who don’t really need or want a bike but would buy one for a specific occasion are not buying those bikes at the moment. bike sales volumes are down compared to 2023. 2023 was already a tough year compared to pre covid. Bikes under £2000 (Halfords main market) are down more with more expensive bikes and specialist retailers slightly up.
Van Rysel made a ridiculously small number of those team edition replicas, like no more than a couple dozen if I remember rightly? Selling out a tiny batch isn’t really an indication of market strength.
Another retailer using every
Another retailer using every excuse to pretend a downturn in sales wasn’t their fault, except the one that really matters they don’t sell stuff I or many potential customers want to buy.
Halfords have a dedicated ESG
Halfords have a dedicated ESG board.
Oh dear.
With the sub 150p share price at almost all time lows, go woke go broke.
Philip White wrote:
To my knowledge Wiggle didn’t have an ESG board and yet they ACTUALLY went broke. So the phrase should Shirley be ‘Don’t have an ESG board go out of business!’ Needs some work as it’s not quite as punchy to appeal to those that are so inclined.
I had to google what as ESG
I had to google what an ESG board was…
brooksby wrote:
Something to do with one of these, isn’t it?
–
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I discovered yesterday that
I discovered yesterday that Elizabeth I was woke. I saw the portrait of her holding a rainbow !
Perhaps a company
Perhaps a company specialising in selling accessories for dangerous polluting vehicles will see its long-term prospects improve when its strategy changes to focus on more environmentally and socially acceptable markets. That’s the E and the S: I don’t know what Halfords’ Governance arrangements are like, but investors (who drive the share price) like to know they’re putting their money into well-run businesses.
Institutional investors (predominantly pension funds) are the main source of investment for listed UK companies. They have increasing regulatory requirements to monitor their investments’ ESG performance, and to publish their own results. More fundamentally, they are belatedly starting to understand that there are no long-term investment gains to be had from an uninhabitable and/or politically-unstable planet. They don’t want to invest in companies that don’t have credible decarbonisation etc plans, and they are divesting where companies can’t show how they plan to thrive in a post-carbon world.
It’s literally the free market in action: investors deciding for themselves what they want to do with their own money based on what they perceive to be their own self-interest. And businesses who want investment are competing to attract that money. This is exactly what people who say they’re “anti-woke” say we should have more of.
Philip White wrote:
So does pretty much every major company, including the most successful. You might as well say Halfords have lifts in their offices, have lifts go broke, for all the sense that correlation makes.