Wiggle administrator reveals beleaguered cycling retailer made £10.4m profit during administration

Wiggle generated more than £41.7m in sales since the cycling retail giant entered administration last October, the administrator revealing that this resulted in a profit of £10.4 million. 

The details come in documents shared by administrators from FRP Advisory Trading Limited, the report covering the year since Wiggle Chain Reaction entered administration in October 2023. 

It confirms that 400 of the 447 staff Wiggle had when it entered administration were made redundant, with others opting to resign; while 121 of 137 staff were made redundant at Chain Reaction Cycles and Chain Reaction Cycles Retail.

As per the trading accounts, Wiggle's heavy discounting, clearance sales and bulk stock sales post-cessation of trading led to total sales of £41.7m between 24 October 2023 and 23 October 2024. When costs — including £15.8m of stock purchases — were factored in, it left Wiggle having made £10.4m profit during the period of its administration, a figure the administrators say they are "pleased" with.

Despite this, it is noted that the final trading account will not be available until April 2025 as the final associated costs of trading and final outcome remain fluid. It is also worth noting these figures offer no indication of how the relaunched Wiggle website has fared since intellectual rights were purchased by Mike Ashley's Frasers Group and only refer to trading under the administrators' control.

The administrators detailed that sale process, Ashley's Frasers Group swooping to purchase Wiggle Chain Reaction Cycles' brand and intellectual property at the beginning of 2024. It was initially reported the deal was worth less than £10m, the exact figure turning out to be £3m. 

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Initially the administrators had looked to sell Wiggle Chain Reaction as a going concern, an offer from an interested party accepted from "a private equity fund with global operations". Despite a completion date set for 19 December and "considerable due diligence and time invested", the proposed buyer withdrew the offer on the day completion was due.

The administrators reported that trading remained profitable but the historically slow start to the year in January and February saw things slow down. In the background, three interested parties continued due diligence with a view to purchasing the business as a going concern. The parties were described as being "Global Private Equity houses and industry competitors".

Ultimately a going concern sale "was not achievable due to the inability to right size the company's operating fixed overheads", particularly the extensive IT infrastructure which had been built "on the assumption that the company would achieve sustainable annual revenues in excess of £1bn".

"In reality the company did not achieve these revenue levels even during peak sales through Covid 19 trading," the administrators said. "The inflexibility of the IT infrastructure ultimately caused the parties considering a going concern purchase to all fall away."

On 22 February, Frasers Group bought the intellectual property for £3m plus VAT, an initial payment of £2.625m paid on completion, the rest to follow once all necessary transfers of intellectual property concluded, something which has now happened.

It is also noted that administrators negotiated a licence for brands, meaning remaining stock could be shifted via accelerated closing down sales. The successful post-administration trading has generated enough that there is confidence all preferential creditors will be paid in full.

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The are no charges registered for secured creditors, while it is estimated that there may be a total of "around £174k" in final preferential creditor claims, such as arrears of pay, unpaid pension contributions and holiday pay.

"A claim for unpaid pre-appointment pension contributions has been processed by the administrators' staff in conjunction with the pension provider [...] and this claim accounts for £108k of the above preferential claim," the report states.

"It is currently anticipated that preferential creditors will be paid in full subject to the final asset realisations and settlement of professional fees."

Final claims for secondary preferential creditors are awaited from HMRC but are estimated to total around £2.78m. HMRC ranks these in respect of: VAT, PAYE (including student loan repayments), Construction Industry Scheme deductions and employees' NI contributions. It is also estimated that these will be paid in full.

The administrators also believe that "there should be sufficient funds available" to pay a dividend to unsecured creditors "in due course, subject to the final costs of the administration and subsequent liquidation".

Since the intellectual rights were bought by Ashley's Frasers Group, who added the business to its retail empire that already includes Evans Cycles, the website has been relaunched with its old orange logo.

In May, a massive clearance sale on Wiggle Chain Reaction outlet products began at Evans Cycles, with cyclists spotting discounts of up to 70 per cent on the ill-fated brand's stock. 

According to images from the Cheetham Hill, Manchester branch of Evans Cycles, Kask Protone road helmets which retail for around £200 were being sold for £40, while some e-bikes were priced at £250. The sale also included Castelli and DhB clothing, and boxes including smaller items and accessories such as pumps and lights could also be seen in the photos, prices starting at just £1.

No financial reports or figures have been offered for the new Frasers Group Wiggle since its purchase in February, although Evans Cycles' latest accounts for the financial year ending April 2023 saw a £22.8m post-tax loss, significantly worse than the £5.3m loss posted a year earlier.