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Latest blow for Wiggle Chain Reaction as parent company closes US offices and prepares insolvency filings

Signa Sports United, the owner of Wiggle Chain Reaction Cycles and several other cycling retailers, last week learnt that it could no longer rely on €150 million of committed funding from its parent company

The latest blow in the seemingly never-ending bad news cycle for Wiggle Chain Reaction and other cycling retailers owned by Signa Sports United (SSU) is that the company has closed its United States offices and is preparing to make insolvency filings.

The update comes from Bicycle Retailer and Industry News, SSU closing its Park City offices in Utah, the site which was home to operations for Vitus and Nukeproof, and was opened by Hap Seliga who said "an amazing group of people has been forced to swallow a bitter pill".

"Despite exceeding our top and bottom line Financial Year 2023 goals handily, Signa Sports United North America's bike division has been forced to cease all operations with less than a few days' notice. This was triggered Monday by a sudden reneging of a binding  €150 million equity commitment to Signa Sports United N.V.

"To say this comes as a shock is an understatement. I haven't even begun to be able to process this yet."

The future of Berlin-based SSU was looking bleak from midway through last week after its parent company, Signa Holding, withdrew €150m of financing a week after it had delisted its shares from the New York Stock Exchange amid "severe liquidity and profitability challenges".

Signa Holding informed SSU – which also owns Bikester and Probikeshop – that it was terminating its unconditional equity commitment, funding which began in June 2023 and was deemed crucial to securing the company's future.

> "I hope anyone who bought recently used a credit card": Black Friday begins at Wiggle Chain Reaction Cycles… but is it safe to spend with the troubled retail giant?

On Friday it was reported that the company is preparing to make insolvency filings for its subsidiaries in the coming days.

Earlier in the week, SSU had been critical of the withdrawal of the funding promise and said that ending the commitment of funds, needed to "cover the operating financial needs of SSU and to secure the ongoing concern", was "unjustified" and that "appropriate legal steps" would be taken.

"The Company considers the termination of the Equity Commitment Letter by SIGNA Holding unjustified," SSU said in a statement. "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 parent company struggles meant further concerns for Wiggle Chain Reaction, the cycling retailer reportedly heading towards administration as a result.

On Thursday, the website Cycling Electric reported that it "has seen a notice from the company to a customer" which outlines that without securing an alternative source of funding to SSU (which was itself depending on the promised but withdrawn funding from controlling shareholder Signa International Sports Holding), Wiggle will "have no choice but to begin administration proceedings."

> Wiggle reportedly heading towards administration due to parent company funding woes

Mike Ashley's Frasers Group, which already holds Evans Cycles and ProBikeKit in its portfolio, has been touted as the most likely candidate to buy Wiggle Chain Reaction Cycles should it be put up for sale.

And it was to that backdrop that, on Friday, Wiggle Chain Reaction announced an early start to the Black Friday sales on its websites, with up to 60 per cent off, prompting some concerns about spending with a troubled retailer.

Wiggle Black Friday sale

There are even reports on some forums, apparently from people within the cycling industry, of the company having asked suppliers not to send in fresh stock, our article on Friday looking into whether it is safe to part with your cash in search of some of Wiggle or Chain Reaction Cycles' bargains.

Dan joined road.cc in 2020, and spent most of his first year (hopefully) keeping you entertained on the live blog. At the start of 2022 he took on the role of news editor. Before joining road.cc, Dan wrote about various sports, including football and boxing for the Daily Express, and covered the weird and wonderful world of non-league football for The Non-League Paper. Part of the generation inspired by the 2012 Olympics, Dan has been 'enjoying' life on two wheels ever since and spends his weekends making bonk-induced trips to the petrol stations of the south of England.

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10 comments

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leedorney | 4 months ago
1 like

It's a shame BUT it's a big company and Richard Branson always says, 'split' a company so it's manageable. In my experience, people in big organisations or companies will screw it for everything they can get out of it at the expense of it...time and again this happens

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a1white | 4 months ago
1 like

Bought a DHB helmet (and some bike cleaner) from them on Friday, delivered today, standard free delivery (they attempted to deliver yesterday, but I was out). All good. Helmet is incredible value at the reduced price of just £10. Looks very decent, great for just using on my hybrid around town. Some bargains avaiable on the site anyway.

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MTB Refugee | 4 months ago
6 likes

I think that road.cc should throttle back on the scare-mongering a little. I ordered a new shifter and derailleur on Friday with the standard Evri delivery and it arrived today(Monday). Constantly harping on about impending doom has a tenancy to make it come true, as customers stop ordering and cash flow dries up. Maybe give them a chance before signing them off?

Avatar
Left_is_for_Losers replied to MTB Refugee | 4 months ago
1 like
MTB Refugee wrote:

I think that road.cc should throttle back on the scare-mongering a little. I ordered a new shifter and derailleur on Friday with the standard Evri delivery and it arrived today(Monday). Constantly harping on about impending doom has a tenancy to make it come true, as customers stop ordering and cash flow dries up. Maybe give them a chance before signing them off?

Click bait and all that though. 

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henryb replied to MTB Refugee | 4 months ago
5 likes

If news outlets like this one were to hold back on reporting the serious financial difficulties Wiggle/CRC are in then, when their loyal readers lose money after shopping with Wiggle as it collapses, they would have some tricky questions to answer about why they weren't open with what they knew

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MTB Refugee replied to henryb | 4 months ago
2 likes

6 near identicle articles in the last 4 days with the same rumour isn't good journalism. Imagine that, multiplied by all the news sites on the internet and you have a failed business regardless of the actual state of your finances.

If you shop online always use a credit card. 3 weeks ago I had to do a chargeback for £800+ due to a company going out of business. Very sad for the company and everyone who works for them, but the process was very simple and fast and cost me nothing.

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stonojnr replied to henryb | 4 months ago
0 likes

And the people whose jobs at Wiggle are possibly under threat as a result don't count ?

There's a real risk with businesses whose cashflow is falling or too low, that idle speculation about their liquidity forces them into bankruptcy.

Simply because people's fear of then submitting orders, though you will be protected by using a credit card, kills the order book, and drives it to unsustainable levels of debt.

If Wiggle are still completing orders,which they are, then its fair to report that factually as prominently along with any factual news reported about the parent companies financial activities.

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festival | 4 months ago
1 like

I remember the origins of Wiggle based at Butler cycles in Portsmouth.   I can understand the likes of Evans shops struggling with their overheads compared to the internet giants but how do you get to dominate the market and still fail?  Incompetence, greed or both?

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Bigfoz replied to festival | 4 months ago
0 likes

Bear in mind it's not Wiggle/CRC who are bust - there's no indication that that part of the business is anythig other than robust. The parent company however is not so healthy. So having bought WCRC in Dec 2021 for $3.2Bn (Not bad for an online bike shop founded with £2,000 25years ago...)  it's now basically going to be collateral damage of the SSU going bust. SO there's no chat it's not redeemable, but I suspect that $3.2Bn paid in Dec2021 will make finding new owners pretty tricky. 

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Freddy56 | 4 months ago
4 likes

I saw 'Extra' vans getting their stock back today at the Wolverhampton warehouse. I googled extra and they wholesale a load of brands. So fairplay to Wiggle not taking others down with them. It is sad to see any jobs going in our little cycling community.

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