It has become a regular feature during the 15 months since the UK voted to leave the EU – a company, publishing their full or half year results, complains the subsequent drop in the pound has hit profits by pushing up their costs or eating into the disposable incomes of their customers.
Halfords, the car parts and cycling accessories retailer, bucks that trend.
Its trading update on Tuesday, which also marks the swansong for outgoing chief executive Jill McDonald, indirectly credits the drop in the pound for encouraging people to take “staycations” at home this summer.
The company reported that during the 20 weeks to 18 August, sales were up by 4.8% on the same period last year.
On the closely-watched like-for-like sales measure, which strips out any impact of store openings, closures or refurbishments, sales were up by a still-solid 2.8% – with sales in the cycling sub-category up by 5.2%.
Ms McDonald, who leaves next month to become head of clothing, home and beauty at Marks & Spencer, said: “I am pleased with the trading performance over the first 20 weeks of the year in both motoring and cycling.
“A combination of good planning and execution meant that we optimised sales from the staycation summer, with strong growth in camping, roof boxes and cycle carriers.
“This complemented our service-related retail sales, which grew significantly faster than our total sales, as we continue to demonstrate our relevance to the growing ‘do it for me’ customer.”
The news, as related to the weaker pound, was not all good.
Image: The pound has fallen in vale since last June’s Brexit vote
Halfords, as it reminded investors, had previously warned that the weaker pound would leave it facing £25m in higher costs during the present financial year, £15m of it in the first half, although it is confident that, over time, it will be able to recover that.
It insisted that its mitigation plans had been put in place. Most bikes sold in the UK are sourced in the Far East and are bought in dollars.
However, this is a factor that will also hurt a lot of independent cycle retailers, which make up the majority of the 2,500 cycle shops in Britain.
Halfords, with its superior buying power, should be able to ride out this turbulence better than the average local independent bike shop.
There are a couple more points to make about this.
The first is that a lot of the spending Halfords sees from customers is ‘non-discretionary’, in other words, it is spending about which customers have little choice.
If your car needs a new set of windscreen wipers or your bike has a flat tyre, it is not something you can put off or save up for, it is a purchase you need to make immediately.
However, it is clear Halfords has benefited from an upsurge in people staying at home, as shown by the strength of sales in camping equipment and roof boxes.
Image: Cyclist Victoria Pendleton launched a new e-bike for Halfords in 2016
Cycling, too, continues to go from strength to strength. While a lot of spending in this area is non-discretionary, the skill of the retailer lies in getting people to trade up or shell out more, which Halfords appears to have been doing.
E-bikes, a line it has been pushing hard, are selling well. The retailer signed Victoria Pendleton, the former Olympic gold medallist, to design the Pendleton Somerby, a power-assisted bike, which it sells for £750 in more than 300 stores alongside other own-brand electric bikes.
It will be interesting to see in coming weeks whether Halfords is an outlier. The chances are that it is not.
Barclays Corporate Banking reported last month that one in three Britons planned to spend more holiday time at home this summer.
Many of those benefiting from an uptick in staycations will be independent bed-and-breakfast providers.
But the City will be looking out to see whether some of the larger hotel operators, such as Premier Inn, owned by Whitbread, have also enjoyed a sales boost. The same applies to the pub and restaurant trade.
JD Sports, owner of Millets and Blacks, two other big camping equipment retail chains, could be another beneficiary.
Meanwhile, there is no doubt that the weaker pound has attracted more foreign tourists to the UK.
Barclays said 63% of international travellers were more interested in visiting the UK than they were a year earlier and that 31% of the 10,000 it surveyed cited the weaker pound as a reason for visiting.
So, while the weaker pound has created a headache for some businesses, it is an ill wind that blows nobody any good.
Source: SKY News