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.
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.