Halfords bike sales hit by supply chain disruption

Cycling retailer Halfords (HFD.L) has become the latest company to be hit by the ongoing supply chain disruption, warning that the situation may continue for some time.

Like-for-like cycling sales at the firm were sharply lower than last year, down 23% for the 20-week period to 20 August.

Halfords said it had struggled with low availability of some of its bikes, although bike sales were still 24% higher than in 2019 after a boom during the pandemic.

The availability of adult mechanical bikes was particularly low, leading to “materially lower growth rates towards the end of the period”. However, the sales of kids and electric bikes remained steady.

Read more: UK service sector growth slows amid staff shortages and supply chain disruption

Some of the issues Halfords faced included factory production constraints, rising commodity prices, transport disruption, and recruitment issues among technicians and heavy goods vehicle (HGV) drivers.

It said it also had to deal with some disruption from COVID-related staff absences.

Halfords shares fell more than 3% in London on the back of the news.

“Although our cycling business is currently impacted by the considerable disruption in the global supply chain, as the UK's largest cycling retailer we are well positioned to adapt and to serve our customers, and we remain confident in the long-term outlook for the cycling market,” Graham Stapleton, chief executive, said.

It follows a string of companies that have recently reported similar struggles, from supermarket chains to bakery chain Greggs (GRG.L), Nando’s, and Wetherspoons (JDW.L).

In July, the Road Haulage Association (RHA) reported that there is a shortage of around 100,000 drivers, warning that the situation had reached a “crisis point” with critical supply chains failing.

It said that many drivers had gone back to their home countries, either due to uncertainty over new Brexit rules, or because of the UK's COVID-related lockdown restrictions.

Read more: Get ex-cons driving lorries to ease HGV crisis, says logistics boss

In contrast, Halfords did post strong growth in its retail motoring unit, which now represents 65% of its revenues thanks to Brits opting for staycations this year.

The 52.1% rise from a year ago was also driven by the increased scale of its autocentres business, and ongoing demand for its mobile expert vans, Halfords said.

The bikes-to-car parts and servicing retailer revealed that overall sales were still up 10.5% over the period, and kept its full-year target for pre-tax profit at £75m ($103m).

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Cycling is a real growth opportunity, but the group’s being held back by supply chain problems. Not being able to offer the right stock, or enough of it, is inevitably putting a lid on progress in the division. These are unlikely to be resolved soon.”

She added: “The other thing to keep in mind is that staycations are likely going to become less popular as and when the world gets back to normal. What this will mean for sales in the next summer season is yet to be seen.”

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