// Halfords expected to reveal a pre-tax profit between £90m and £100m for the year to the end of April
// This compares with a £52.6m profit for the previous year
// Bike sales benefited Brits choosing to cycle more when travelling during lockdown periods
Halfords’ profits are set to almost double for the past year after people shunned public transport in favour of bikes and cars during the Covid-19 pandemic.
The cycling and motoring specialist retailer is set for another bumper trading announcement when it updates shareholders on Thursday next week.
It is expected to reveal a pre-tax profit between £90 million and £100 million for the year to the end of April.
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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 Brits chose to cycle more when travelling during lockdown periods while health and fitness has also been a priority for many.
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.
“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,” analysts at RBC said.
“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 retailer’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 Halfords’ retail motoring business, which had seen demand weakened by government advice not to travel far during lockdowns.
Investec’s Kate Calvert said it was “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.
“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,” she said.
with PA Wires