Parent company of Wiggle / Chainreactioncycles in big financial trouble

[FIJIGabe]

I'm going to venture a guess that their profitability took a significant hit after January 2019, when they stopped being able to sell Shimano parts to the US. The pandemic boosted their sales, I'm sure, but now that the bust is in full swing, they just don't have big ticket sales items to lure US buyers, especially since they don't sell SRAM (and by extension, ZIPP or anything under their umbrella). It sucks to lose a vendor, but they just haven't been a factor for me in a while.

US overseas sales really do not amount to a whole lot, especially something as specific as groupsets. Places like Merlin are still selling Shimano groups to the US also.

This is mostly a combination of unchecked overexpansion, Brexit and the ongoing supply chain mess resulting from the pandemic.

ChainReaction/Wiggle lost the ability to sell more than Shimano groupsets. Chains, cables, cassettes, chainrings (wearable items that are pricey) - all items that US consumers could get below wholesale prices were no longer available to sell to the US. A recent GeekWarning podcast even talked about this being a contributing factor to their downfall. I'm not saying that this was the only factor, but when you lose the ability to sell components of the largest bike groupset manufacturer (Shimano) to the largest economy in the world (US), it's going to have an impact (and probably a significant one).

[Aeo]

Bought a Prime Primavera handlebar when it was 68€. Has been shipped, hoping for a low weight

[Sockman]

I'm going to venture a guess that their profitability took a significant hit after January 2019, when they stopped being able to sell Shimano parts to the US. The pandemic boosted their sales, I'm sure, but now that the bust is in full swing, they just don't have big ticket sales items to lure US buyers, especially since they don't sell SRAM (and by extension, ZIPP or anything under their umbrella). It sucks to lose a vendor, but they just haven't been a factor for me in a while.

US overseas sales really do not amount to a whole lot, especially something as specific as groupsets. Places like Merlin are still selling Shimano groups to the US also.

This is mostly a combination of unchecked overexpansion, Brexit and the ongoing supply chain mess resulting from the pandemic.

ChainReaction/Wiggle lost the ability to sell more than Shimano groupsets. Chains, cables, cassettes, chainrings (wearable items that are pricey) - all items that US consumers could get below wholesale prices were no longer available to sell to the US. A recent GeekWarning podcast even talked about this being a contributing factor to their downfall. I'm not saying that this was the only factor, but when you lose the ability to sell components of the largest bike groupset manufacturer (Shimano) to the largest economy in the world (US), it's going to have an impact (and probably a significant one).

That's quite speculative- firstly, do you know what % of Wiggle CRC gross sales were to the US market? What % of that was Shimano components? My guess is overall not heaps, but I might be wrong. You see loads of DHB, Vitus, Prime around Europe and the UK, which I would speculate are bigger revenue drivers than Shimano parts to the US...

[ultimobici]

That's quite speculative- firstly, do you know what % of Wiggle CRC gross sales were to the US market? What % of that was Shimano components? My guess is overall not heaps, but I might be wrong. You see loads of DHB, Vitus, Prime around Europe and the UK, which I would speculate are bigger revenue drivers than Shimano parts to the US...

When you’re working on the razor sharp margins Wiggle/CRC were, even a small dip in turnover can screw you. There’s plenty of home based alternatives to DHB but Shimano is bought on price.


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[Pottermouse]

Got to wonder about the financial engineering behind this.

Wiggle was a successful business that grew organically. Bought up in 2011 and then pumped up by private equity investors expecting large returns on their investment. PE normally runs in 5 year cycles.... so round 1 would have sold out in 2016 trousering a load of cash... bought CRC in 2016/17 in round 2... and sold out to Signa in 2021 trousering another big load of cash.

Signa got the money from the NYSE through a "SPAC"... a short lived type of investment vehicle which meant the owners have to make a 20% return to get to 0 as the financial engineers have trousered the other part already.

So more and more money going out of the company... and it goes pop/ cannot cope with a downturn.

Just like Evans Cycles build up organically since ther 1930s... bought by PE in 2008.... massive growth to pump up its apparent value; big return for investors who got out in 2013; goes pop in 2018. Emperor has no clothes.

Evans Cycles was bought up by Sports Direct... no doubt Wiggle will go the same way.

[maquisard]

Multiple CRC staff made redundant today.

[Sockman]

That's quite speculative- firstly, do you know what % of Wiggle CRC gross sales were to the US market? What % of that was Shimano components? My guess is overall not heaps, but I might be wrong. You see loads of DHB, Vitus, Prime around Europe and the UK, which I would speculate are bigger revenue drivers than Shimano parts to the US...

When you’re working on the razor sharp margins Wiggle/CRC were, even a small dip in turnover can screw you. There’s plenty of home based alternatives to DHB but Shimano is bought on price.


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Sure, I can't argue there. I just don't know if I can believe that their whole business relied on Shimano components to the USA... They continue to trade, 'business as usual', so perhaps Wiggle is actually doing just fine and they are simply waiting for a buyer to take over? I hope they survive. I've always found them quick with shipping, competitive on price, stock a wide range of products and have good if not amazing customer support.

[ultimobici]

That's quite speculative- firstly, do you know what % of Wiggle CRC gross sales were to the US market? What % of that was Shimano components? My guess is overall not heaps, but I might be wrong. You see loads of DHB, Vitus, Prime around Europe and the UK, which I would speculate are bigger revenue drivers than Shimano parts to the US...

When you’re working on the razor sharp margins Wiggle/CRC were, even a small dip in turnover can screw you. There’s plenty of home based alternatives to DHB but Shimano is bought on price.


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Sure, I can't argue there. I just don't know if I can believe that their whole business relied on Shimano components to the USA... They continue to trade, 'business as usual', so perhaps Wiggle is actually doing just fine and they are simply waiting for a buyer to take over? I hope they survive. I've always found them quick with shipping, competitive on price, stock a wide range of products and have good if not amazing customer support.

I doubt their business relied on US sales of Shimano too.

However several things have coalesced to undermine their business model. First Shimano & Sram have tightened up their regional restrictions in recent years. This was not a problem until Brexit became final. With Brexit finalised it’s much harder to sell outside region. That’s USA & Canada, Australasia & the Far East gone pretty much overnight. Europe isn’t worth it unless it’s little things.

[Pottermouse]

So, for those who want a bit more detail about the collapse of Wiggle (part of Signa Sports), there is an interesting piece here:

https://www.linkedin.com/pulse/postmort ... dek-xau9f/

And for those who read the financial press, the WHOLE of Signa (large property empire - $23 bn - of which Signa Sports, and Selfridges is a part) appears at risk:

https://www.businessoffashion.com/news/ ... up-empire/

Their debt is trading at 30c in the €... meaning that investors think there is a 2/3rd chance of complete collapse.

Wiggle may still be a valuable business, but the group of which it is a part is in severe difficulties.

[Lina]

This is much more about the times of free money being over and expecting COVID bike boom to last forever than not being able to sell some of their stuff to the US. The individual businesses/brands under Signa will most likely get bought out at pennies on the dollar and continue to operate. Wiggle or CRC themselves are profitable businesses, and Prime and dhb are recognisable brands at this point.

[kbbpll]

Well crap. I just went to Wiggle and tried changing from EN GPB to USD and got "Wiggle is no longer accepting international orders." That sucks. Pretty much everything bike-related I've bought in the last 10 years (granted, not a lot) has been through them - tires, tubes, chains, etc. I guess their sale emails disappeared a while ago and I didn't notice, probably around Black Friday time.

[warthog101]

Well crap. I just went to Wiggle and tried changing from EN GPB to USD and got "Wiggle is no longer accepting international orders." That sucks. Pretty much everything bike-related I've bought in the last 10 years (granted, not a lot) has been through them - tires, tubes, chains, etc. I guess their sale emails disappeared a while ago and I didn't notice, probably around Black Friday time.

I have bought a lot of stuff from them too over the last 10 or more years.
It was a good way of avoiding the Australia Tax where many items are far more expensive here than overseas.
Crap indeed.

[kbbpll]

I ran across this article after posting, dated Dec 1, announcing international sales would be closed "in the coming weeks". https://www.pinkbike.com/news/wiggle-an ... -pace.html
One tidbit in their statement relates to an earlier discussion here. They say 85% of their sales were domestic (i.e. UK), so losing Shimano sales to the US seems to have been a drop in the bucket.

[bikeboy1tr]

Well crap. I just went to Wiggle and tried changing from EN GPB to USD and got "Wiggle is no longer accepting international orders." That sucks. Pretty much everything bike-related I've bought in the last 10 years (granted, not a lot) has been through them - tires, tubes, chains, etc. I guess their sale emails disappeared a while ago and I didn't notice, probably around Black Friday time.

I have bought a lot of stuff from them too over the last 10 or more years.
It was a good way of avoiding the Australia Tax where many items are far more expensive here than overseas.
Crap indeed.

Have you tried Merlin? I am not sure if they ship your way but wouldnt be surprised if they did.

[warthog101]

Have you tried Merlin? I am not sure if they ship your way but wouldnt be surprised if they did.

Yes I have several times, thanks though.
Less range and no free shipping but still generally better than most of what is here in Aust.
CRC/Wiggle had a good range and spend over $200- was free shipping.
Their DHB bibs work for me and when bought on special great value. Ditto their jackets.