LONDON (Reuters) - Halfords (HFD.L) is on track to meet profit forecasts after underlying cycling sales grew 5.9% in its third quarter, helped by strong Christmas demand for electric bikes as consumers become more climate-conscious, it said on Thursday.
While many British retailers struggled with lower consumer spending over the Christmas trading period, Halfords bucked the trend as shoppers rushed to buy children’s bikes and its range of shop-assembled cycles.
On Dec. 21, 2019, the 127-year-old company sold its highest number of bikes ever.
Shares in the British bike and car products retailer were up 6.5% at 09.36 GMT after what Liberum analysts called a solid third quarter.
“Positive like-for-like sales in cycling and a further acceleration in autocentres growth, combined with gross margin improvement and cost control, results in a very positive message coming from today’s third-quarter update,” they said.
The company reconfirmed that underlying pretax profit for the full year 2020 would come in the range of 50 million pounds ($65.27 million) to 55 million pounds, in line with guidance, as it updated on the 14-week period to Jan.3.
Electric bike sales were up 96% year-on-year in that period, with one in five bikes and scooters sold now electric. Electric bikes may be attractive as a greener mode of transport than traditional cars and motorbikes.
Chief Executive Graham Stapleton said the rise was fuelled by climate concerns as well as older customers returning to the cycling market.
“Customers are responding to what they’re seeing on climate,” Stapleton said in an interview with Reuters on Thursday.
“There’s just no doubt that electric is now here - it’s no longer an emergent small trend. It’s becoming a very significant part of our business in both cars and bikes,” he added.
The popularity of electric bikes is in line with Halfords’ strategy to become more service-focused, as electric bikes require more maintenance than ordinary bikes.
The trend towards more climate-friendly transport was reflected in a 53% increase in garage bookings for electric cars in the period of 14 weeks to Jan. 3, Halfords said, adding that this was expected to continue.
Stapleton said that overall he was pleased with the retailer’s performance, although market conditions remained subdued.
Some analysts had predicted a bounce in consumer spending after Britain’s Dec. 19 general election broke the political deadlock around Brexit, but Stapleton said there was no evidence of sentiment changing significantly since then.
Reporting by Elizabeth Howcroft; Editing by Sarah Young and Jan Harvey