UK retailer Halfords buoyed by pandemic cycling boom

© Reuters. Outbreak of the coronavirus disease (COVID-19) in St Albans

LONDON (Reuters) - British retailer Halfords (L:HFD) forecast on Tuesday a sharp rise in its first half profit as it benefited from a cycling boom during the coronavirus pandemic, but warned that growth would be slower in the next six months.

The company said sales of bicycles and related products surged 59.1% in the 20 weeks to Aug. 21, from a year earlier, thanks to the rising popularity of cycling as Britons fretted about travelling on public transport during the pandemic and increasingly saw it as a health and leisure activity.

Government voucher schemes have also driven growth.

Halfords, which trades from 447 stores, said it saw strong growth across all cycling product categories, with like-for-like sales up 76% year-on-year in its performance cycling business, Tredz. Sales of electric bikes and scooters jumped 230%.

The company forecast underlying pretax profit of 35-40 million pounds ($46-53 million) for its first half to the end of September - assuming expected demand levels in September and stability in the relative value of the U.S. dollar.

That would be up from 25.9 million pounds a year earlier.

Halfords said it has seen a rebound in sales at its motoring division in the past few weeks as car journeys picked up. However, it cautioned that "significant uncertainty" remained for the second half of its 2020-21 year.

"Given the natural fall-off in the relative strength of cycling and staycation products during winter months, alongside a difficult economic outlook, H2 FY21 profit before tax could be significantly lower than H1 FY21," it said.

Shares in Halfords, having risen 5.6% on Monday, were down 3.2% at 0829 GMT. They are up 4.4% this year.

Group like-for-like sales rose 5% in the 20-week period, with the strong performance in cycling partially offset by a 28.6% fall in motoring products sales, as car journeys were limited by the crisis.

The motoring division returned to growth in the final three weeks of the period, helped by strong sales of "staycation"-related products, such as roof bars and boxes.

The group's overall online sales rose 160% in the first half.

Separately on Tuesday industry surveys showed British consumers increased their spending in August as they went on "staycation" holidays, bought equipment for working from home and went back to shops to buy clothes.