Halfords Group plc reported same-store sales at its Cycling segment downshifted abruptly in the fourth quarter ended April 3, likely marking a slowdown or end to the United Kingdom's bike boom.

While the company does not break out quarterly sales and earnings for its four Retail segments, it reported same-store sales at its Cycling segment slowed to 1.2 percent during the quarter compared with 13.3 percent for the preceding nine months. Even so, the company, which also operates the United Kingdom's largest chain of auto services centers, said it plans to expand its new high-end Cycle Republic chain from four to 15 locations in fiscal 2015. The four stores generated £500,000 in sales in fiscal 2015.

Overall Cycling sales grew 11.9 percent to £294.8 million during the full fiscal year, thanks to same-store sales growth of 11.4 percent, which was substantially above the 7.0 percent reported for the entire Retail division.
Premium bikes stood out as the best performing category, posting same-store sales growth of 24.9 percent, on top of 29.9 percent in the previous year. Sales of Cycle-To-Work products grew by 15.4 percent and accounted for roughly half of premium bike sales.

Sales off substantially since disappointing 2014 Tour de France  
Halfords' premium bicycle sales surged in late 2012 after Bradley Wiggins became the first Brit to win the Tour de France and surged again when countryman Chris Froome took the yellow jersey in 2013. The growth prompted Halfords to open its first four Cycle Republic stores in fiscal 2014 to reach the premium and enthusiast sectors of the market and downtown locations in London and other cities where it is underrepresented. Thanks to ideal weather and anticipation that British riders might take the yellow jersey for the third year in a row, Halfords' same-store Cycling sales surged 21.3 percent in the fiscal first quarter ended June 27, 2014. But when injuries and crashes took the UK's best riders out of the Tour de France race early, bike sales slowed.

Children's Bikes sales grew 13.3 percent in fiscal 2015, driven particularly by bikes for older children, which grew 40.5 percent due to a successful Christmas marketing campaign.

Halfords sells both its own cycling brands, which include Apollo, Carrera, Boardman and 13 cycles, as well as Kona, Mongoose, Raleigh, Pinarello and other brands.

Sales of Parts, Accessories and Clothing grew by 8 percent, which was a disappointment following the launch early in the fiscal year of apparel from Boardman Bikes, a retailer acquired in June, 2014.

“[That] was lower than we would have liked,” said Halfords Chairman Dennis Millard. “It remains an opportunity that we are well-positioned and determined to take.”

Cycle Repair sales were up 17.8 percent with second-half sales up 27.3 percent, helped by the roll-out of a new operating model that is now used in over 400 stores.

Fewer, better trained store associates
Millard attributed strong same-store sales performance across the Retail division to a major store remodeling program and a shift in employment practices that involved giving fewer employees more hours and better training. During the fiscal year, Halfords remodeled 74 stores, reduced its store headcount by 1,500 and increased average weekly hours of retail employees from 17 to 25. As a result, the percent of employees who left their job within three months of being hired dropped to nine from 20 percent. The Retail division, which operated 467 stores at the end of the quarter, sells everything from cycling products, car racks, roof-top boxes and camping gear to car audio and navigation systems and car seats.

Revenues at the Travel Solutions segment increased 5.4 percent driven by travel equipment, due to strong product and promotions, and Child Car Seats.

Expanding Click & Collect
Online Retail revenues grew by 14.3 percent and represented 12.2 percent of total retail sales, up from 11.3 percent in fiscal 2014. The growth was aided by an extended assortment of products that now numbers around 160,000, and the enormous popularity of the company's “Click & Collect” service, which lets customers avoid shipping costs by picking up their orders in stores. Over 90 percent of Halfords' online sales are picked up in-store and this year the company's stores will begin offering pickup services for other retailers in a bid to drive new customers into its stores.

While Halfords will grow its Cycle Republic chain in fiscal 2016, it will trim the assortments and change the layout of its cycling departments, while expanding its online offering with drop ship partners.