Firm to scale back camping products and is thought to have bid for Evans Cycles
Halfords has unveiled a back-to-basics turnaround plan that focuses on motoring and cycling, as it looks to capitalise on rising sales of electric vehicles.
The UK’s biggest bike retailer said it would scale back the sale of products such as power tools and camping equipment and turn Halfords into a bike and motoring specialist to make it more competitive in a “rapidly changing retail environment”, with a focus on electric vehicles.
Halfords’ chief executive, Graham Stapleton, who took the helm in January after Jill McDonald joined Marks & Spencer, said: “Customer behaviours and the competitive environment are changing and we face an increasing number of headwinds. Our new long-term strategy means we will become far more focused on the categories we are best known for, motoring and cycling.”
Electric bike sales figures released on Thursday underscored the strategic move, which also followed reports this week that Halfords is among the bidders for Evans Cycles, its struggling rival.
Sales of electric bikes have surged and were Halfords’ “standout performer” in the 20 weeks to 17 August, the company said during a strategic presentation to investors on Thursday.
Electric bikes are popular with younger people but also make cycling accessible to older people. Prices at Halfords start at £600 for a folding electric bike, while a top-of-the-range mountain bike costs £3,000. Electric scooters for children range between £115 and £700.
Halfords has about 800 shops and garages offering MOT testing and repairs, and wants to raise this to 1,000. This includes opening a further 100 autocentres – it currently has 316 – and doubling the number of bike shops that trade under the upmarket Tredz and Cycle Republic brands to 50. The firm shut six underperforming Halfords stores in 2017 and similar closures are planned this year.
The retailer has also given trials to mobile vans that offer a car parts fitting and repair service on people’s driveways, and wants to roll them out across the UK.
Analysts at Stifel, a stockbroking firm, said the overhaul “recognises the significant threat posed by Amazon, Argos and other price-led mass merchandisers”.
However, it came at a cost that rattled investors. The strategy involves putting more money into the business – £60m a year rather than £40m – to cover the cost of opening additional garages and premium shops, enhancing existing stores, training staff to improve the firm’s fitting and repair service, and revamping its online range.
However, the increased investment means profits will be flat in the financial years to the end of March in 2019 and 2020. The news sent shares in the FTSE 250 firm down more than 9% to 305p, valuing the business at just under £700m.
Halfords raised eyebrows earlier this year when it it paid Stapleton £1.82m for his first 75 days in the job, from 15 January to 30 March, the end of the company’s financial year. This included a one-off award of £1.6m to compensate him for a bonus he forfeited when he left his previous job at Dixons Carphone.