Halfords consolidates its position as Britain’s largest commercial tire seller after agreeing to take over Lodge Tire for £37.2m
- Lodge Tire operates 50 garages and hundreds of mobile vans across the UK
- Halfords has acquired five car assistance companies in the past three years
- The company has recently moved into automotive services
Halfords is set to become the UK’s largest commercial tire supplier after agreeing to acquire another car services company.
The cycling and car products retailer said it would pay £33.2million in cash for Lodge Tyre, followed by a further £4million in financial year 2025, depending on specific profit levels. achieved.
Based in Stafford, Lodge operates 50 garages and hundreds of mobile vans across the North of England, West Midlands and East Anglia, primarily serving B2B customers with commercial vehicles.
Repair giant: Halfords has told investors the latest acquisition ‘further consolidates’ its position as the UK’s largest car maintenance and repair business
It is the fifth car assistance business in the past three years to be acquired by Halfords, following Tires on the Drive and McConechy’s in 2019, Universal early last year and Iverson and Axle Group in the past few years. last 12 months.
Halfords told investors the latest acquisition “further cements” its position as the UK’s largest car service and repair business.
Additionally, the Redditch-based group said it would help expand its presence in parts of the UK where its presence is smaller and increase its chances of winning major domestic contracts.
When the deal is finalized, Halfords expects automotive to provide more than three-quarters of its annual revenue, while services will provide just under half of all sales, up from just 26% in 2020.
In recent times, the company has gradually shifted away from cycling towards automotive services, which it believes will be more financially viable and lucrative.
Graham Stapleton, Managing Director of Halfords, said: ‘The current business environment strengthens the case for creating ever more resilient, needs-based revenue streams, which is exactly what the automotive category offers.
“As part of this, the nature of the commercial tire market means that it is non-discretionary and therefore extremely well insulated against macroeconomic uncertainty.”
In a business update published last month, the company revealed that total sales rose 9.2% in the last quarter, thanks to extremely strong growth in its Autocentres car maintenance and repair business. .
This offset lower trading income from cycling as consumers cut back on spending amid inflationary pressures.
Halfords benefited greatly at the start of the Covid-19 pandemic from an increase in bicycle sales as Britons sought to avoid public transport and fewer cars were on the roads.
Growing concerns about global warming have given new impetus, as has the rise of national holidays and the growing popularity of electric bicycles and scooters.
The easing of pandemic-related restrictions ultimately led to a slowdown in orders, but the group was also affected by supply chain pressures, such as rising freight and raw material costs, as well as staff absences and recruitment problems.
Derren Nathan, Head of Equity Research at Hargreaves Lansdown, said: “The B2B automotive services industry has an added level of resilience as fleet managers have no choice but to replace worn or damaged tires. . They will not leave their employees on the side of the road.
Shares of Halfords Group were up 3.2% at £1.48 by mid-morning on Wednesday, although their value has fallen by more than half so far this year.