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news
Wiggle and Chain Reaction logosWiggle Chain Reaction owner woes continue following “unjustified” withdrawal of €150m funding commitment by parent company
The future of Signa Sports United, the owner of Wiggle Chain Reaction Cycles and several other cycling retailers, appears increasingly bleak following the decision of its parent company to withdraw €150m of financing – just a week after the German sports e-commerce giant delisted its shares from the New York Stock Exchange amid “severe liquidity and profitability challenges”.
Earlier this week, parent company Signa Holding informed sports and outdoor retailer Signa Sports United (SSU) – which also includes Bikester, Probikeshop, and Fahrrad.de along with WiggleCRC under its umbrella – that it was terminating its unconditional equity commitment, funding which began in June 2023 and was deemed crucial to securing the company’s future.
According to a statement released by Signa Sports United, the parent company had made an unconditional commitment earlier this year to provide additional liquidity until 30 September 2025, while a supplementary agreement in September promised to provide funds to “cover the operating financial needs of SSU and to secure the ongoing concern” of the company.
Of the original €150m commitment, €143m remains undrawn at the time of the agreement’s termination.
SSU says the funding was essential for the company to meet its obligations and constituted the basis of its going concern and liquidity assumptions. The company, unsurprisingly, branded the termination “unjustified” and says it will take “appropriate legal steps”.
“After many years of mutually trusted collaboration and reliable financing between the Company and SIGNA Holding, SSU has relied on the binding and unconditional nature of the Equity Commitment Letter to continue to draw funds to meet its near-term obligations and for its going concern assessment of the Company and its subsidiaries,” SSU said in a statement.
“The Company considers the termination of the Equity Commitment Letter by SIGNA Holding unjustified.
“While the Company regrets the termination of the Equity Commitment Letter, it will take the appropriate legal steps in the interests of all its shareholders, creditors, and employees.”
The news adds to what has already been a bleak month for Wiggle Chain Reaction Cycle’s parent company, who last week delisted its shares from the New York Stock Exchange citing subdued demand, inventory overstock, and weakened consumer interest in the cycling sector.
The decision to restructure was reportedly influenced by the Berlin-based retailer’s performance in the first nine months of 2023, particularly as the “bike segment has continued to lag management expectations”.
The company – which also admitted that it is suffering from “severe liquidity and profitability challenges” – said that the benefits of being listed on the exchange did not “justify the costs and demands of management’s time necessary to meet the company’s US regulatory commitments”.
The delisting is expected to take place over the next week, bringing an end to its two-year stint on the NYSE, which began just a few months after it took over Wiggle Chain Reaction Cycles. At the time its stock prices were around $9, but they have now fallen to just $0.94 as per October 2023’s figures.
While SSU’s concerns offer a telling microcosm of the entire cycling industry at the moment as it struggles to come to terms with the post-pandemic slump plagued by overstocked inventories and supply chain issues, WiggleCRC has also endured a bumpy 2023 in its own right.
A controversial rebranding in April this year saw Wiggle ditch its iconic orange theme for a new green and blue colour scheme, as well as a new website which was roundly criticised for its lack of functionality.
And a few days later, the newly rebranded website, along with that of Chain Reaction Cycles, went down for a spell, leaving even more customers disgruntled.
Just last month, WiggleCRC had announced a £97 million loss for the year 2022, almost seven times greater than the losses sustained in 2021. The company’s former chief finance officer blamed the aftereffects of Covid, Brexit, and ongoing economic uncertainty for the significant drop.
While the current challenging state of the UK economy was blamed for “subduing consumer demand” (UK sales fell by 32 percent compared to 2020 and 2021), the company claimed its drop in international sales of 26 percent was “driven mainly by the full year impact of Brexit reducing sales into the EU, where higher duty and fulfilment costs have necessitated higher pricing”.
The acquisition of Wiggle CRC by Signa Sports United during the period in question also brought “significant one-off legal and professional and staffing costs”, adversely affecting net profit by over £36 million, though SSU also fully repaid and waived all shareholder debt and intercompany loans, amounting to £312 million, as part of the deal.
After obtaining a PhD, lecturing, and hosting a history podcast at Queen’s University Belfast, Ryan joined road.cc in December 2021 and since then has kept the site’s readers and listeners informed and enthralled (well at least occasionally) on news, the live blog, and the road.cc Podcast. After boarding a wrong bus at the world championships and ruining a good pair of jeans at the cyclocross, he now serves as road.cc’s senior news writer. Before his foray into cycling journalism, he wallowed in the equally pitiless world of academia, where he wrote a book about Victorian politics and droned on about cycling and bikes to classes of bored students (while taking every chance he could get to talk about cycling in print or on the radio). He can be found riding his bike very slowly around the narrow, scenic country lanes of Co. Down.
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27 comments
They can waste money on a terrible re-branding exercise, that offered a lesser service, further alienated their core customer base, and now they're going bust? God bless the capatalist process. Am looking forward to the new businesses and their websites that will take Wiggle/CRC's place. Bye, I hope you learned some lessons on the way to tanking your busienss #ManagementFail
It amazes me how an online portal wiggle and CRC can end up going downhill. They HAD great prices, then they got bought out, that was the 1st red flag for me then the website got harder to use + featuring models who really looked like theyre cyclists (least CRC used real cyclists) and they featured more none cycling products, so be. Then got an email saying my buying history would be wiped 😳 - again yet another company in this island is going downhill (Wilkinson's). So effectively what it get is amateurs in the management game playing with what can be a successful emporium..their loss. I do all my buying via AliExpress now - I said goodbye to UK sellers years ago, ok you wait a bit but you get it direct from China, where EVERYTHING is made anyhow. If Boris 'dick head' Johnson wouldn't have been a class cock then we'd have a trade agreement with China but no hes baying to the wef busy'd himself with contributing himself with Ukraine or partying then to run a country. Sunak meanwhile is like the prim little schoolboy satchel in check complete with sandwiches UNELECTED screwing up the country, at least I can still enjoy my cycling safe in the knowledge the world going t!ts up 😎
I think the only person who has welcomed the relaunched Wiggle website is my wife. Looking back at how much I used to buy from them Vs what I spend now is pretty sobering. A textbook case of how to ruin a business
If they are overstocked, why not have a sale and increase some sales?
They've already been doing that, upto 75% off in some cases.
Not that you can find anything on their site because the search function is so poor
Yes but the only items which are 75% off are men's leggings in xxxxxs in a crap colour or a bolt for a Zipp stem from 2011.
Nothing decent is ever in their sale.
I think the general feeling is 🤷🏼♂️ tough crap Wiggle, you kinda deserve what you get. Sad but it happens.
years ago, woolly hat shop was the place for cycling stuff at a great price.
WHS on ebay and their own shop (bikeparts.co.uk) are still keenly priced. I use them and Merlin for consumables, mostly tyres, tubes & chains.
I've not bought anything from wiggle/CRC for years, too Amazon-ish for my liking. Can't bring myself to care if the owners screw it up.
Around 2010 WHS would do killer deals on Shimano and Selle italia. I bought tones of stuff from them until the shift to Merlin and CRC, then eventually Wiggle.
I no longer live in the UK, so mostly buy from Germany and the price difference is huge. I'm still paying around 37 quid for a GP5000 and wiggle are closer to 50 ( when they have them in stock )
Any company that doesn't realise that a website 'filter' function for lights might need 'front' and 'back' more than it needs 'colour' (of casing) probably doesn't know enough about bikes to know what they're doing...
Seems like a standard case of private equity messing up functioning companies while creaming off any money they can get.
Literally that. They invoke generic dev companies (usually the one Rishi's father-in-law owns) to cut costs and create these things across various companies and brands they own, irrespective of the industry - so some IT guys in Gurgaon specced it. And they'll have worked on the new touchscreen interface for McDonald's an hour later...zero relevant product knowledge - it's considered unnecessary.
What's scary is how often I see it nowadays - from online banking to fitness apps, user testing is never finding so many issues but hilariously the solution is trending towards not doing any user testing...
Come come - capitalism is for capitalists, not the suckers, who should not be given even breaks .... or any breaks at all. Just put your money on the virtual counter and pishoff back to the wage slavery so the capitalists have more dross to sell 'ee!
Usury, once a sin but now No 1 virtue. Anyone who doesn't practice it is obviously just a loser. (Although being a rentier is OK; but don't waste money on maintenance or fungus removal).
But this to the side ..... I have some pure and special oxygen I am selling. It's gathered from special plants in my secret garden then bottled by naked fairies so you can imagine how good it is! Only £29.99 for 25ml. Good for extra pedal-push-go but also makes your tyres go faster if used therein.
Does that include P&P?
Pumping and pressure-testing?
No, a gnome will deliver the wonderful gas then bargain with you for the delivery fee. Should you be parsimonius, the gnome may put a spell on you that makes your fundament itch every time you sit on the bicycle saddle, meaning you must honk everywhere.
However, if you're very lucky the 25ml of special oxygen may contain above a certain percentage of fairy spit, from when they blow it into the containers. This is an aphrodisiac, although it generally only stimulates a compulsion to frot a garden gnome. This is illegal in most places but not in certain parts of Norfolk; or Glasgie, where anything goes, as we know.
An aphrodisiac, you say? You might be mixing up a gnome with a goblin
Not good enough, I'm selling the ultra pure oxygen that I extract from loudspeaker cables for audiophiles ( https://www.canford.co.uk/OFC-OXYGEN-FREE-COPPER-LOUDSPEAKER-CABLE ). Its a win win, better cables and better oxygen. I'm making a fortune!
I fail to see how you can be making a fortune as extracting the oxygen from them loudspeaker cables destroys their worth (£1056.35 each + VAT). But wait! How much are you selling your oxygen for? We may become involved in a price war ..... .
I may send a gnome to give you an itch. Anything's fair in the ole capitalist game. Just ask Pishi or them mates of Bokum who entrepreneured a few billions out of him (well, us) for useless face masks and the like. (I think they were made of fairy dust, AKA spiv-promise or, in the common parlance, lies).
Anyroadup, I'm sure that my oxygen is better than yourn. Oh yes it is - I have 5 tame bicycle website reviewers lined up to say so! If Wiggle was to sell it they would be saved.
No, you take a £1 speaker cable, remove the oxygen and it is worth over £1000, but as it is now completely copper free the oxygen is also worth over £1000 so cost of materials £1, retail price of goods £2000+. You reduce the price of your oxygen if you want I'll just claim that shows how poor your quality is!
The fiasco of their website rebrand also appears to extend to their hiring as if you look for vacancies on their corporate website it doesn't list them but directs you to linked in which means you have to have an account with that social network to apply. Maybe for some roles this is entirely logical but for other organisations most at least offer the option to apply direct or a link to a retained agency or jobsite. Looks like I'll have to forgo that dream opportunity to be a 'growth analyst' after all.
This is posturing by the directors of the Wiggle/CRC inheritor company (SSU?) so they dont get struck off if/when SSU goes bankrupt.
Sounds like the parent is effectively bankrupt already.
Dark days especially when lack of credit is enough to spook suppliers.
Yep. A company pulling out of an "unconditional" agreement with one of its own subsidiaries is a company that is thoroughly in the shit.
It's the parent holding company cutting their losses.
These investment funds and holding companies buy into things they don't fully understand, to diversify their portfolio. Signa was real estate, specifically it had begun to buy up shopping mall type property. Buying online retail was hedging their existing product, and presumably they chose cycling as a growing market...
Completely underestimating that it was a bubble, that majority of the new customers buying bikes across 2018-2020 (particularly as we came out of lockdowns) would only ever buy 1 bike as they're peripheral consumers not bike fanatics.
We're seeing it elsewhere too - Lapierre aren't providing bikes to FDJ any more because their investment fund parent company have slashed spending. They bought the company(ies) and immediately cut them back.
All whilst taking a % cut off the top, so they are all good themselves.
Some even have other sister companies where they can isolate the profit from investments going well, and thus take a chunky dividend but put all the failing ones to the side and let them burn... But then at parent company level they can use the losses of one, to offset the profits of the other and thus pay less tax.
It's happening far too much right now and it compounds on top of the channeling post-Brexit market.
Wiggle/CRC, peloton, wahoo and garmin have all got their fingers burnt by the artificially buoyed market of 2020/2021 caused by the pandemic and subsequient lockdowns: anyone with any sense could see that sales from this period was unsustainable!
Bugger!
I got a Wiggle voucher for my birthday last month - better spend it quickly!
Genuinely would spend that today - they might not make it to Monday at this rate.
If you haven't spent this already, do it now. Seriously - do not wait a day or two, do it now.
Did it work????