Analysis: Can Jill McDonald take Halfords up another gear?

And with Halfords due to report half-year results next Thursday, investors and analysts will be looking for further reassurance that the former McDonald’s and British Airways executive’s plan is working.

It has been a bumpy ride so far for McDonald during her 18 months in charge.

A tough first-half last year saw Halfords’ share price dive, while falling full-year profits reported in June caused another sharp slip.

But its performance has improved since then.

Good weather this summer and an Olympic bounce boosted Halfords’ first quarter cycling sales, with retail like-for-likes up 1.1%.

The strong performance in cycling is expected to have carried on in Halfords’ second quarter, helped by September’s heat wave.

“The weather has stayed warm which has prolonged the [cycling] season, which is good,” says Investec analyst Kate Calvert.

Speculation that we have reached ‘peak’ cycling after the burst of interest sparked by 2012’s London Olympics has mounted as other cycling retailers, including Evans, have found the market tough.

A mountain stage

But McDonald has insisted this is not the case.

She points to the fact that participation in cycling is still relatively low in the UK and the Government is still spending significantly on infrastructure.

“A limited edition range was launched with Trott this summer”

McDonald will no doubt be hoping a good performance in cycling will quieten the naysayers.

Halfords is also still making the most of its ability to attract big names.

One of McDonald’s Moving Up a Gear pledges was to strike more partnerships. And she is delivering on this, having added to its stable of Olympians in the form of Laura Trott. A limited edition range was launched with Trott this summer, making her the fourth Olympian to be working with the retailer.

Electric dreams

The retailer is also backing the growing trend for electric bikes by launching one with another Olympian, Victoria Pendleton, this month. Halfords’ commercial director Emma Fox predicts e-bikes will be the “next big thing…not only for commuters but also for a whole range of cyclists, new and seasoned”.

As part of Moving Up a Gear, McDonald also vowed to invest in understanding its customers more through data and promised a “renewed focus on customer service”. Customer metrics have improved “significantly”, according to Halfords, but more evidence of these initiatives bearing fruit would be welcome.

McDonald has appeared frustrated that the media seems to focus on the health of Halfords’ cycling division as opposed to its less sexy motoring unit. The retailer bags 70% of its revenues from motoring.

“Sales of dash cams are up 65% year-on-year at Halfords”

In order to shift this attention Halfords has started talking a lot about surging sales of dash cams, which are making up for dropping sales of sat navs. Apparently sales of dash cams are up 65% year-on-year at Halfords.

Finally, on Brexit, McDonald has suggested Halfords may have been helped by Britons choosing to staycation because of the state of sterling. Whether this has been the case for the rest of summer will be interesting.

Certainly McDonald should have plenty of positives to flag next week, but the future picture for Halfords remains a bit foggy.