Credit where it is due, Halfords’ latest update reveals considerable resilience given the challenges being thrown at consumer-facing stocks at present.
The motoring and cycling retailer is notably sticking with its annual forecast as it looks to balance the need to mitigate the impact of rising input costs while still offering its customers decent value.
People need their cars for everyday life so spending in this area is likely to be more resilient than on more discretionary items and the strength of Halfords’ motoring services business reflects this situation.
“Moving to a model where a significant chunk of sales is services-related should potentially improve the visibility of earnings too,” said AJ Bell’s Russ Mould.
“If they are well executed loyalty schemes are a no brainer for a retail business, helping to secure repeat business at what is usually a limited cost, and Halfords’ Motoring Loyalty Club certainly looks to be going well.
“Sales of cycling products, appropriately enough, tend to be more cyclical and this area of the business is looking like more of a clapped-out old racer than a shiny new carbon-fibre road bike.
“For the time being buying a new bike is unlikely to be a priority for cash-strapped households, but Halfords can afford to lean on the motoring business and wait for the next upswing in demand.”