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From Times OnlineApril 16, 2009

Halfords axes specialist shops after two yearsNick Hasell
Halfords has scrapped its chain of standalone cycle stores just two years after launching the shops.

The start-up formats — trading as Bike Hut and Cycle Republic — will either be rebranded as Halfords or closed at a cost of £1.2 million.

Halfords said the pilot chains “have been impacted by the increasing success of our superstores in the premium market segment and the migration of sales to the web, particularly for accessories. Consequently, we no longer believe that the stand-alone concept will deliver the absolute levels of financial return demanded for Halfords investments”.

Halfords launched its first Bike Hut in Brighton two years ago and has added a further five stores, while opening two under the Cycle Republic fascia. The chains were designed to capture the boom in demand for premium road and hybrid bikes that has accompanied the growth of cycle to work schemes.

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However, Halfords has had difficulty in securing distribution relationships with some of the premium cycle manufacturers given its launch of its own top-end Boardman range, designed in partnership with Chris Boardman, the British Olympic champion.

The nascent brand was given a significant boost last year when Nicole Cooke won Britain’s first gold medal of the Beijing Olympics in the women’s road race.

David Wild, Halfords's chief executive, said: "We were disappointed not to secure the relationships we wanted with some cycle manufacturers, and we will carry on trying to do so for the Halfords format. However, this decision is more about using the infrastructure we've got with the existing Halfords superstores rather than adding to it".

Halfords sells one in three bikes in the UK but only one in six of the premium bikes sold.

In its year-end trading statement, Halford reported that like-for-like sales in cycling and car maintenance were down 1.2 per cent and that it had begun a further £10 million programme of cost reductions, including a rationalisation of its distribution network from three UK depots to two.

The company said that revenues continued to decline in car enhancement categories, such as satellite navigation equipment, which have been hit by price deflation and reduced spending on discretionary items, and that trading in eastern Europe, where it has opened six stores in Poland and the Czech Republic, remains

http://business.timesonline.co.uk/tol/b ... 103398.ece