Halfords has revealed its cycling sales grew in the most recent financial year, with reports stating that the ‘bellwether’ retailer’s good news marks a positive shift for a struggling industry.
Yet, whether or not Halfords’ positive turn should be interpreted as a sign of wider improvement is worth bearing scrutiny amid the struggles faced by other businesses – and global affairs.
It is also worth noting Halfords’ own caution around its recent improvements.
Halfords had a “strong finish” to the year
The announcement released on Halfords’ website says the brand had a “strong finish” to the 52 weeks leading to 28 March 2025.
It says it outperformed its £30m cost-saving target and the profit before tax was “around the upper end of the £32m to £37m range previously guided”.
Halfords says its cycling sales are up 1.7 per cent and the business as a whole has seen sales increase by 2.3 per cent on the year prior.
Former CEO Graham Stapleton, who has been succeeded after seven years by Henry Birch, says: “This is a performance to be proud of, mitigating more than £30m of inflation in what continued to be a very challenging trading environment in FY25.”
The success is also remarkable compared to the business’s outlook last June, when it warned that the cycling market is “significantly worse than expected”.
It is also a turnaround from when Halfords reduced its 2023 profit forecasts to a narrower range of £48m to £53m following customers spending less. Its cycling sales dipped 2.3 per cent for the same year.
What is Halfords’ outlook?
Despite the growth in sales, Halfords says retail sales remain volatile and consumer outlook is “uncertain”.
The business also says the changes to the minimum wage and National Insurance from the autumn budget will result in a £23m labour cost.
“We have undertaken a comprehensive review of the business to identify potential mitigations for the additional cost expected from FY26, which has generated opportunities in pricing strategy, further buying and cost efficiencies, proactive portfolio management and acceleration of strategic initiatives,” Halfords says.
What about Trump’s tariffs?
Halfords doesn’t directly export or import goods to or from the US and says that as a result it has “no direct exposure to newly introduced tariffs”.
But it adds that this does not make it immune to the effects of Trump’s tariffs: “[T]he indirect impact on our supply chain, including on product costs, freight rates and shipping times remains to be seen, as does the impact on consumer spending. We will continue to adapt our plans and respond tactically to the evolving environment as the year progresses.”
So is this good news?
While the news from Halfords is positive, it comes after a long period of difficulty in the UK cycling industry – which some have predicted will continue.
Since 2023, we have seen many brands and retailers face financial turmoil or closure.
Online retail giants Wiggle and Chain Reaction were put into administration in October 2023, before being bought by Mike Ashley’s Frasers Group. Orange Bikes called in administrators in January last year and GT reduced its workforce.
In January, Brompton revealed its profits had plunged by 99 per cent, with CEO Will Butler-Adams saying in an interview with The Guardian that “The industry is still in turmoil and will not get better this year”.
Raleigh also reported losses of £30m in January 2025.
The Bicycle Association (BA) has reported that sales were down in 2024, continuing the long post-Covid downturn. But it says the rate of decline began to ease last year and it ultimately predicts growth in 2025.
“Whilst the BA expects the market to remain challenging in 2025, with the backdrop of a difficult macroeconomic climate, it predicts the long downturn will gradually bottom out over the coming months with forecasted volume growth in bike and PAC of 2% and 3% in services in 2025,” it says.
The BA also predicts sales of electric bikes will drop by 1 per cent.
“The post-Covid overstocking, and associated heavy discounting levels in the market, persist and our industry still has a real challenge to restore margins and increase value,” says Simon Irons, the BA’s data and insight director.
There is also the uncertainty around the consequences of Trump’s tariffs for companies that export to the US, which are set to be hit the hardest. If demand for UK-made products drops in the US, profits will be affected.
Few in the cycling industry have yet wagered what the effect of tariffs will be, but an impact on profit and ramifications in the supply chain will make a tough situation tougher still.
