British premium cycling kit and accessories manufacturer Rapha has posted a pre-tax loss of £12 million for the year up to 29 January 2023, citing a downward trend in customer interest due to the cost of living crisis as well as overhead costs due to commitments made during the pandemic.
Documents filed at Companies House this week reveal that Carpegna Limited, the holding company of the north London-based business, suffered an annual comprehensive loss of £10.6 million after taxes, making it the sixth straight year that the brand was in the red.
However, an independent auditor said that they have not identified "material concerns" that could cast any "significant doubt" over Rapha's future, at least for the next twelve months from when the financial documents were issued.
In comparison, Rapha's pre-tax loss for the year 2022 was £10.5 million, and £7 million the year before that. Its turnover also dipped in 2023, going down from £131 million to £118 million.
In a statement shared with road.cc, Rapha’s CEO Francois Concervey said: "Our financial results highlight the impact of a turbulent few years and the ongoing challenges faced by the business, and the cycling industry as a whole. Despite a negative profit year, through strategic decision making around reducing overhead costs, leadership changes and doubling down on our mission to 'inspire the world to live life by bike’, I’m confident in our ability to navigate the current economic climate and make the right decisions to see improved performance.
"During the recent period, Rapha witnessed a return of customer demand levels closer to the long-term average growth trend. This followed two exceptional periods driven by the COVID-19 pandemic and subsequent lockdowns, which significantly boosted the demand for sporting goods, including cycling apparel.
"However, concerns over the cost of living have started to impact consumer confidence in certain markets. Additionally, the market has become more competitive as competitors, both direct and indirect, strive to normalise their supply chains after the disruptions caused by the pandemic.
"Despite the challenges faced, Rapha has undoubtedly emerged stronger, retaining many customers who initially joined during the pandemic while also acquiring new ones. The company's revenue growth and customer base have remained resilient, holding up well against the record levels achieved during the height of the pandemic."
After the Covid-19 pandemic and then the cost of living crisis, Rapha's director Sean Clarke said that "revenue levels and customer acquisition have held up well". However, its earning were adversely affected due to commitments to overheads costs made during the pandemic.
Earlier this year, we reported that Rapha underwent a refinancing through a debt-for-equity, aimed at reducing its cost of borrowing. CEO Convercey, previously Rapha’s chief brand and marketing office, however had told road.cc that despite the total revenue being marginally down versus the previous year, it had "far outperformed" the industry trends in the past year.
Following the cycling boom experienced by the cycling industry during lockdown, the post-pandemic period has been marked by tough times all across the board, with even cycling giants like Shimano and Halfords struggling.
Most recently, it was Wiggle Chain Reaction, the online retailer which has been a staple for many British cyclists' shopping bug became the latest company to bite the bullet as it entered adminstration.
It was soon announced that its parent company Signa Sports United had filed for insolvency at all courts in germany, and now Wiggle has been put up for sale by the administrators. Just this week, 105 members of its staff were laid off, with rumours of interest from several parties, including Mike Ashley's Fraser Group.
Adwitiya joined road.cc in 2023 as a news writer after graduating with a masters in journalism from Cardiff University. His dissertation focused on active travel, which soon threw him into the deep end of covering everything related to the two-wheeled tool, and now cycling is as big a part of his life as guitars and football. He has previously covered local and national politics for Voice Wales, and also likes to writes about science, tech and the environment, if he can find the time. Living right next to the Taff trail in the Welsh capital, you can find him trying to tackle the brutal climbs in the valleys.