Halfords looks to ride to the rescue of rival Evans Cycles

Redditch-based bicycles-to-car parts retailer Halfords is understood to have made an offer for struggling rival Evans Cycles.

Halfords, which is listed on the London stock market, was among a number of parties which tabled indicative offers for Evans earlier this week, Sky News reported.

Other bidders included turnaround investors, with Evans requiring more than £10m in fresh capital to see it through the next few months of trading.

Evans has slipped into the red due to a combination of rising costs and challenging trading conditions.

The chain‎ trades from just over 60 stores across the UK and traces its history to 1921, when the first FW Evans Cycles shop opened in south-east London.

The company, which is owned by the private equity firm ECI Partners, is being advised by PwC while AlixPartners is advising the retailer’s lenders.

It has been backed by a number of investment firms, including Active Private Equity, which sold it to ECi in 2015 for an undisclosed sum.

Meanwhile, this morning Halfords announced to the stock market its intentions for growth through an accelerated investment programme.

It said capital expenditure will increase from the prevailing guidance of around £40m a year to up to £60m over the medium term, with “significant investment” in its stores, garages, and digital platforms.

Halfords said that, alongside this, it has started a “wide-reaching” cost and capital efficiencies programme, which will enable it to fund the increase in capital expenditure from cash released from within the business over the life of the plan.

“Despite incremental investment in operating expenditure as we implement our long-term strategy, we anticipate FY20 profit before tax to be broadly flat on FY19, with mid-single-digit percentage annual growth anticipated thereafter as the plans take effect.”

Graham Stapleton, chief executive, said: “We are a strong and growing business, that benefits from a solid financial platform and highly experienced and capable colleagues. However, customer behaviours and the competitive environment are changing and we face an increasing number of headwinds.

“Our new long term strategy means we will become far more focused on the categories we are best known for, motoring and cycling. We will have a more convenient, easy to shop and scaled services business, offering a thousand service locations. Customers will also benefit from unique product, services and shopping experiences all underpinned by integrating the separate businesses within the group. We have an exciting future ahead and I am confident that we will become even more relevant to motoring and cycling customers in the future.”