Halfords has experienced "significantly worse than expected" performance in the cycling market, and expects the situation to decline further for 2025, it has said in its preliminary report for the 2024 financial year.
It also points to Bicycle Association figures that show a cycling market that remains 30% down on pre-Covid levels.
The major UK chain has the biggest market share of cycle retail in the UK, and is also a major motoring retailer.
The amount customers are willing to spend on bikes has decreased, Halfords says, in a story that was first picked up by road.cc, adding that poor spring weather was continuing to impact cycle sales.
The Halfords report also mentions the "failure of Wiggle", which entered administration in October but was ultimately bought by Mike Ashley's Frasers Group, and described the situation as indicative of the broader challenges of the industry. The report also talks of how more customers are buying on credit.
"The market has become more challenging and competitive as it continues to consolidate quickly… and more customers are purchasing on credit, leading to significant pressure on gross margins," it says. "The high-profile failure of Wiggle demonstrates a much broader challenge for cycling businesses in the UK."
Halfords had predicted a 1% decline in the cycling market in 2024, but it actually fell significantly more than that – by 4%.
"Low customer confidence in the ongoing cost-of-living crisis has further impacted demand for big-ticket, discretionary items such as bikes," it says.
It described the cycling market – as well as a challenging car tyre market in which consumers were delaying the replacement of dangerous tyres – as "headwinds out of our control [that were] worse than anticipated", but the Autocentres part of the business was described as the "star performer" and continued to fare well.
More broadly, the company's profit before tax had fallen 18% to £36.1 million
Conversely, progress had been made in its Cycle to Work scheme which was up 8.3% year on year, and also at its high-performance online retail subsidiary Tredz, where like-for-like sales were up 11.1%, it said.
The report added that it had "further cemented leadership of the cycle market" and predicted that it would emerge in a stronger position than ever once the market began to recover.
