Investors are betting on the cycling industry, despite supply chain issues

Halfords, a British publicly traded bicycle-to-motoring retailer, saw its share price reach a six-year high today as the company’s 2021 financial results were published. According to Reuters, the boom in cycling during the pandemic tripled Halfords’ annual profit. Growth is expected to continue, but the company says it might be held back by current supply chain issues plaguing the industry.

This year Halfords’ revenue rose by 13 per cent, to more than $2.22 billion. Though the company sells car and bike components, it was clear that its cycling products (up 54 per cent) and performance cycling products (up 66 per cent) were the driving contributors to growth. The company also sells e-bikes, which have seen sales increase by 76 per cent.

Supply woes

Although the outlook is mostly positive, problems with the supply chain continue to cause issues for the cycling industry. Graham Stapleton, the chief executive of Halfords says that “Supply was, and remains, a challenge. Where necessary, we adapted specifications and componentry to mitigate bottlenecks in production and worked with new suppliers to achieve a steady intake of bikes throughout the year.”

RELATED: Shimano factory shut down is about to make the parts shortage worse

“Supply challenges for cycling products remain acute, and a return to normal trading patterns remains highly uncertain, particularly in the second half. The general economic outlook remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases.”

Some experts predict that in the coming months, as the supply of available bikes is unable to meet the demand for new products and international travel starts up again, the industry could see sales cooling off, though the public interest in cycling is expected to remain.

Global benefits

The boom will likely have long-lasting benefits for veteran and new cyclists alike. The streets are filling with cyclists and cities are scrambling to accommodate the growing demographic. According to Forbes, the National Bicycle Dealers Association’s 2020 annual market overview report says there was “a dramatic increase in sales dollars and revenue that allowed many specialty retailers to pay off their debts and loans—and for the U.S. bicycle business to actually have a war-chest to finance advocacy and market awareness and growth.”