Halfords shares plunge 26% as British shoppers buy bicycles on credit 

Halfords’ cycling and retail motoring divisions were also hit by 'unusually mild but very wet weather' which led to weaker sales in car cleaning and winter products

The retailer said the fall was driven partly by more people wanting to buy bicycles on credit, which was leading to weaker gross margins than expected. 

Halfords shares plunged by 26% at the close of trade after the British retailer issued a profit warning, in part because of more British consumers buying bicycles on credit.

The motoring and cycling retailer said it expected to post profits of between £35m (€41m) and £40m (€46.74m) for the year up to this April, well down on its initial forecast of between £48m (€56m) and £53m (€61.9m).

In a trading update to the market, it said the profit warning was driven partly by poor returns in its cycling division, which reported an 8% drop in sales in January compared with the previous year.

The retailer said the fall was driven partly by more people wanting to buy bicycles on credit, which was leading to weaker gross margins than expected. 

The cycling market had become more “challenging and competitive” as the sector continued to consolidate, the company said, leading to consumers picking up cheaper bikes through an increasing number of discount promotions and clearance sales at its stores.

Halfords’ cycling and retail motoring divisions were also hit by generally weak customer confidence and “unusually mild but very wet weather”, which led to weaker sales in car cleaning and winter products.

The retail motoring division said sales were down by 5.1% in January, compared with last year, while its consumer tyres market had declined by 4.3%. Halfords shares fell by 23% in early trading. 

Guardian Service