Halfords warns of bike supply challenges as cycle boom continues

Halfords has warned it faces "acute" challenges with bike supplies after Covid restrictions led to surging demand and lockdowns in Asia hit manufacturers.

Sales of bikes rose by 54.1% in the year to 2 April as the pandemic limited local travel and overseas holidays.

Halford said "pent-up" demand for bikes and continuing restrictions on foreign trips would support future sales.

However, it added: "Supply challenges for cycling products remain acute."

As well as strong demand for conventional bikes, Halfords said it had seen a 94% rise in demand for e-bikes, e-scooters and accessories during its financial year to 2 April.

However, global bike supplies have been hampered by shortages of components such as brakes, as well as raw materials. Local lockdowns have also disrupted businesses in Asia which make cycles.

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The Bicycle Association said: "Most bicycles in the world are manufactured in East Asia, and even those which are assembled in the EU often require components shipped from that region. This extended supply chain does mean that, even in normal circumstances, delivery times are long.

"Sudden increases in global demand put additional pressure on production and, particularly recently, there have been constraints on shipping. This has resulted in some temporary delays in supply."

Halford announced "very strong" full-year results, with total sales up 13.1% to £1.2bn. Pre-tax profits rose to £64.5m from £19.4m for the previous year.

Looking ahead, the bike and motoring retailer said: "A return to normal trading patterns remains highly uncertain, particularly in the second half, as the hospitality industry and international travel potentially reopen to a greater extent."

Nevertheless, Halfords said it has seen "positive momentum" continue into the first weeks of its current financial year "with demand for our motoring services strong, cycling demand remaining elevated, and staycation products" proving popular.

Over the last year, it said sales of products related to people holidaying in the UK and motor maintenance had grown, including services such as car cleaning and body repair.

As well as bike shops, garages were also allowed to stay open during periods of Covid lockdown and Halfords said like-for-like revenue from its "autocentres" grew by 9.7%.

However, due to fewer cars being on the road as people worked from home, like-for-like sales within its retail motoring business fell by 12.1%.

It said this was "against the backdrop of 25% fewer car journeys and low consumer confidence".