Halfords will close Cycle Republic and the Boardman Performance Centre in a bid to improve profits in its cycling division. Announced in a statement by the company on Monday morning, Halfords said it would drive more resources into Tredz and the cycling section within Halfords to boost the brand's profitability in cycling.
'The proposed closure of Cycle Republic reflects the challenging economics of a store-based dedicated performance cycling operation. Exiting a low-returning, stock intensive business allows us to improve our return on capital whilst freeing up investment and resources to continue to drive our services-focused strategy, with an emphasis on accelerating the growth of our motoring businesses,' the statement read.
'The proposed closure is expected to be marginally accretive to earnings in FY21 and will also enhance cashflow and net debt on an ongoing basis, principally through lower working capital requirements.'
Halfords reviewed its strategy in November 2019 and came to the conclusion that Tredz, the predominantly online-store that it bought in 2016, was better positioned to take advantage of the online market than Cycle Republic.
In March 2019, Cycle Republic posted loses of £4.3 million. At the time of writing on Monday 16th March, Halfords's stock was down 18% since close of trading on Friday.
The Boardman Performance Centre in Evesham opened in 2018 as a concept store and high-performance wind tunnel, costing over £2 million.
A consultation has begun to discuss the 226 staff members whose jobs will be at risk with the shutting of Cycle Republic. The brand is planning on moving some of these staff into its Halfords and Tredz businesses although a number of redundancies will likely occur.
CEO Graham Stapelton confirmed that the first store closures would take place in early 2021 with the view of selling off the retail sites.
'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 Classification: Restricted period of consultation with impacted colleagues with a view to mitigating as many redundancies as possible,' said Stapelton.
'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.'