Halfords Group plc (LON:HFD) have seen their shares plummet, as the firm told the market that they are planning to close their Cycle Republic chain of stores.
The decision made by Halfords could put up to 226 jobs at risk, and reflects the tough trading environment combined with wider macroeconomic challenges that British High Street firms are facing.
The firm also noted that it intends to shut 22 stores and performance centre site in Evesham in an attempt to streamline focus on its online cycling business, Tredz.
The firm commented: ‘Performance Cycling is an important category for Halfords. We currently serve the enthusiast cycling market through Tredz, a predominantly online business, and through Cycle Republic, a commuter led, store and online offer. Going forward, we believe we will better serve this market by singularly focusing our investment and resources into the Tredz brand, which has both a differentiated and specialist customer proposition and a superior business model in this part of the cycling market.
With investment in the Tredz business, alongside our core Halfords Retail cycling business, we believe we will be uniquely placed to serve both the enthusiast and the mainstream customer in a more economic way than we do today’.
Halfords described their Cycle Republic business as one which was low returning and stock intensive – and the planned exit will allow investment and resources to drive into their motoring business.
Notably, the Cycle Republic division reported a £4.3 million loss last year, and the loss expected this year is expected to be lower.
Graham Stapleton, CEO said: “The Board has come to the difficult, but necessary, decision to propose the closure of Cycle Republic, our retail store-focussed performance cycling brand.
This proposal is not a reflection of the hard work of our Cycle Republic colleagues, who I would like to thank for their commitment and passion in serving our customers. We are now moving into a period of consultation with impacted colleagues with a view to mitigating as many redundancies as possible.
Going forward we propose to focus our investment and resources in Halfords and Tredz, through which we will deliver market-leading specialist propositions for both mainstream and enthusiast cyclists via a business model that improves our overall economics.”
Halfords see steady Christmas trading
In January, the firm told the market that its’ Christmas trading had seen positive growth.
Halfords who work in the automobile and motoring sector reported an earnings rise in its third quoter which accounted for the festive trading period.
Notably, the revenue earned from its Autocentres servicing unit grew over 30%.
Retail saw a like-for-like improvement in the Cycling segment, by 5.9%, though in Motoring, like-for-like revenue was 2.7% lower than last year.
Total revenue has shrunk 0.2% year on year, and has seen a slump of 1.2% on a like for like basis.
For the full-year, Halfords maintained its guidance of underlying pretax profit, in the range of £50 million and £55 million. The measure is also on a pre-IFRS 16 basis, an accounting standard governing the financial treatment of leases.
Shares in Halfords Group plc trade at 81p (-21.08%). 16/3/20 13:48BST.
