Two distributors that supply products to Wiggle CRC say that they have been told to cancel orders with the companies, and that invoices will not be paid in the wake of news reporting the deepening of the online retail giants' financial situation.
The distributors (who wished to remain anonymous) say that they received phone calls from Wiggle CRC yesterday telling them to “...cancel any remaining backorders, no one is going to get paid”.
One of them told us us that it has already started the process of trying to physically pull stock back from the shelves in the state of the art distribution facility too.
This comes in the wake of Cycling Electric reporting that Wiggle CRC had "entered a self administration process". Bike Perfect has been unable to verify this claim.
There have been worrying signs for the retailers recently with the brands' German parent company Signa Sports United (SSU) delisting from the New York Stock Exchange citing “severe liquidity and profitability challenges.”
This was followed this week by SSU having an expected €150 million of future funding withdrawn by its own parent company Signa Holdings. This all follows annual losses of £97 million for the 2022 financial year being posted for Wiggle CRC in July this year, with a 30 percent reduction in overall sales.
Seismic implications
If the two companies were to collapse that would send a tsunami wave of issues through retailers and suppliers - not just in the UK but globally as 38 percent of Wiggle CRC sales come from overseas. Estimates are a stock holding of over £120 million worth of kit, from major brands such as Fox, RockShox, SRAM, Hope and Shimano as well as brands such as Leatt, Manitou, Brand-X, WTB and Microshift imported by Wiggle CRC partner distributor Hotlines-UK.
If the companies go into administration as reported, that stock is going to be sold off – likely at hugely discounted prices – to realise as much capital for investors and government as quickly as possible. In accordance with legal process, the HMRC (government tax etc), banks and then investors will be paid, with creditors (suppliers) unlikely to get much of a look in.
Not only would a collapse of the huge company affect suppliers who will be left with unsold back orders and see stock they’ve already sent being sold at large discounts, but this will massively undermine prices for other sellers too. Many bike shops also rely on Wiggle CRC for spares and stock as their prices were often better than those of official suppliers. As numerous commenters are saying on social media however, “selling for an aggressively unsustainable price isn’t a great long-term business model”.
The futures of much-loved partner bike brands Nukeproof, Vitus and Ragley are also thrown into question by the problems with their parent company. That would be a huge shame after recent rave reviews for their bikes and top level racing successes for sponsored riders.
Is there any good news?
The potentially positive business news is that there are rumours of Mike Ashley’s Frasers Group (Sports Direct, Evans Cycles etc) being top contenders for a buy out bid. They’ve already bought the German retail chain SportScheck from Signa Sports United earlier this year and it would obviously strengthen their bike business significantly.
As much as it’s definitely bad news for a lot of people at Wiggle / Chain Reaction, its subsidiary brands and suppliers, it’s likely to be a brilliant time for bargains across a massive range of kit. Vitus has already been running a blanket ’40 percent off retail price with a month to send the bike back if you don’t like it’ offer for several weeks and that’s likely to be the tip of the iceberg of a Titanic yard sale.
Obviously we’ll keep you updated on how far this Chain Reaction sets off explosions across the industry or whether the mega retailer finds enough Wiggle room to stay in business but for now prepare for a potential feeding frenzy on cut-price kit and bikes.
Bikeperfect has approached Chain Reaction Cycles for comment. Meanwhile, when asked for comment by our sister site Cyclingnews, a Wiggle spokesperson said "We have nothing further to add at this point."
