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news
wiggle.jpgWiggle sold in deal valuing business at £180 million
If, in the mid-1920s, you’d told the owners of a recently-opened Portsmouth bike shop that the business would one day be worth £180 million, they’d have laughed you out of the door, before perhaps wondering if Britain was about to suffer Weimaresque levels of hyperinflation. But that’s the valuation today put on Wiggle, which has been acquired by private equity firm Bridgepoint.
Of course, the company that began life in 1920 as Butlers Cycles has long since broken free off its bricks-and-mortar shackles to become one of the retail success stories of the internet age.
By 1999, the shop’s owners, Harvey Jones and Mitch Dall, had decided to move the bicycle accessories catalogue business they were running from the shop online, having presciently reasoned that their mail order customers knew exactly what they wanted, and that the emergence of e-commerce could help speed up the process.
Dall sold his 26 per cent stake in the business in 2009, three years after ISIS Equity Partners had led a £12.3 million refinancing, while Jones retained his shareholding but stepped back from day-to-day involvement.
Current chairman Andy Bond, a keen cyclist who used to run the supermarket chain Asda, and chief executive Humphrey Cobbold, will remain with the business following today’s deal, which comes just weeks after reports that Wiggle was being groomed for a stockmarket flotation in 2012.
Turnover is approaching £90 million this year, following consistently strong growth that last weekend saw it feature for the second year running on the Sunday Times Fast Track 100 list of Britain’s fastest growing private companies.
Both profit and sales growth in recent years have averaged over 50 per cent per annum, a phenomenal achievement given prevailing economic conditions, but one that highlights the resilience of the cycle industry in bucking the general trend that has put retailers in many other sectors in difficulty.
Wiggle now operates in 88 countries worldwide, with its website translated into nine languages and enabling transactions in 15 different currencies.
Cobbold said that Bridgepoint’s record in helping to grow businesses that share a similar profile meant it was the ideal partner to help take Wiggle forward.
“We are delighted to have a new partner and owner in Bridgepoint, and would like to thank ISIS for being a fantastic supporter of Wiggle, its 200 colleagues, suppliers and brands over the past five years. Their investment and involvement has transformed Wiggle into a truly global retail business with best in class execution,” he explained.
“Bridgepoint is highly experienced and successful in investing in growing retail and consumer businesses, and has an extensive international network which matches Wiggle’s international strategy and growth aspirations, and will be a significant benefit to continuing the strong growth.
“Wiggle could not have achieved this growth without the phenomenal commitment and enthusiasm of everyone of our colleagues, and we look forward to working alongside them as we develop the business the next exciting phase of channel and international expansion.”
Bridgepoint partner Vince Gwilliam highlighted the fact that a number of factors were helping to undeprin Wiggle’s growth in a market estimated to be worth £1.4 billion in the UK and £25 billion globally for cycling-related products alone. The retailer also now sells equipment for runners and swimmers.
“Wiggle is benefiting from strong structural market drivers such as the shift to online retailing combined with the trend towards fitness and health living and the increasing popularity of cycling as a pastime,” he said. “In addition, it has had a strong track record of profitable organic growth.”
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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27 comments
I guy i know here in Singapore is buying Look pedals from CRC as they're cheaper than going through local distribution channels.
As an importer in NZ who has recently quit due to wiggle et al I can categorically say that we were not rolling in the cash!!
We paid for shipping ex works in the UK, customs fees, MAF fees, tarifs etc up the wazoo then have to get the product to the stores. Wiggle pay no duty or taxes shipping to NZ - that is a huge competitive advantage (e.g. The recent debacle over the cost of All Black jerseys here). In many ways you can argue that it is similar to ripping a CD and maybe a loophole that needs closing.
Wiggle were shipping to some of our stores for less than what we could buy the gear from the manufacturer. We would regularly support local events and vie away product and get feedback that it was great but we buy on Wiggle!! Where are they supporting local races etc?
I agree that for the consumer the choice and price is great and yes some stores have rubbish service but it is sad that local jobs and opportunities are going to go and the cash end up with a bunch of VC city boys.
As an importer in NZ who has recently quit due to wiggle et al I can categorically say that we were not rolling in the cash!!
We paid for shipping ex works in the UK, customs fees, MAF fees, tarifs etc up the wazoo then have to get the product to the stores. Wiggle pay no duty or taxes shipping to NZ - that is a huge competitive advantage (e.g. The recent debacle over the cost of All Black jerseys here). In many ways you can argue that it is similar to ripping a CD and maybe a loophole that needs closing.
Wiggle were shipping to some of our stores for less than what we could buy the gear from the manufacturer. We would regularly support local events and vie away product and get feedback that it was great but we buy on Wiggle!! Where are they supporting local races etc?
I agree that for the consumer the choice and price is great and yes some stores have rubbish service but it is sad that local jobs and opportunities are going to go and the cash end up with a bunch of VC city boys.
Have to mention the bike I bought on 30-day trial with Wiggle, and decided I didn't want to keep - jeez@ was that hard work getting them to take it back and refund me
About 4-5 weeks' worth of emails to customer service, who just kept failing to reply to me
In the end, I wrote a long complaint and they sorted it out pretty quickly
With that kind of customer service, though, you won't ever find me spending any serious money at Wiggle
When I broke my bike gps unit, I claimed on my insurance. The insurers took the details and contacted their dedicated LBS who rang me to sort out the replacement. Then they said the unit I wanted wasn't available any more - Garmin have stopped doing it (and the alternatives didn't seem to me to be as good). A quick look on Wiggle and behold! Ten in stock. So I had to ring the insurers to tell them that not only could I get the replacement unit, I could also get it a lot cheaper. What a bloody palaver. The LBS took 2 weeks to not sort it out and when I ordered it I had it within days.
I've griped before about unfriendly condescending service from LBS staff; I really would like to build up a relationship with one and get good service ... but they don't seem interested, and I'm not spending a fortune there when I can go to Wiggle or CC.
Whilst I sympathise with the fact that you couldn't get what you wanted from your LBS, actually it wasn't their fault.
The like-for-like GPS unit was no longer available from the distributors and Wiggle happened to have 10 units left on hand, that's all there is to it.
Your LBS would not have had access to that stock.
The bigger problem that has to be faced here is that whilst the retail garden apperas rosy for the end-user here, it is agood deal less rosy for the importers and distributors who are now often-times smaller than the retail businesses that they are servicing and are bullied mercilessly by them.
If that continues, eventually margins will be eroded to the point where effective warranty and technical support will become impossible to finance, or price pressure on manufacturers for more margin will force lower production costs on them - leading to a further migration of manufacture to less locations less scrupulous in QC etc.
At that point, things will not look so good for those parting with large amounts of money for product whose manufacture and spares support has been sacrificed on the altar of ever-lower retail prices.
Not good ...
in the UK, imaca, Wiggle/CRC have a price advantage over shops but not necessarily a massive one, where they score for a lot of people is convenience, a massive range, and no quibble returns policies.
The combination of favourable exchange rates and carve ups of various markets by local distributors has given them a much heftier price advantage in other parts of the world. I think you are on to something there imaca when it comes to shops completing online service loops - though it's also got to be said that efficient postal systems in the southern hemisphere must still make it pretty easy to return goods. We were having a similar discussion in the office today, not about Wiggle or CRC using shops as their service centres but about manufacturers selling direct to shops or manufacuterers or distributors selling direct to consumers operating click and collect services through their dealers which would also act as service centres - I think we definitely see more of that in the future. That would be interesting because they would in effect be competing against the online retailers while also potentially supplying them. Of course if such a model was a success I suppse they'd potentially be not supplying too.
I'm interested to know what the price difference is between Wiggle etc. and LBSs in UK. Here in NZ it is usually 50-150% more expensive to buy local. Even local online retails are much more expensive and charge shipping on top. Having worked for LBS, it seems they cannot get things wholesale for the online UK price. My suspicion is that the importers are putting on huge markups, and making money for doing essentially nothing. A recent survey (by wiggle, I think) makes it clear they are looking at providing aftermaket support for bike sales overseas. If traditional LBSs here do nothing, they will go the way of the dodo - already they are trending more and more to the low end of the market. Locally we have a service oriented (with limited parts) shop - it's only a matter of time before online retailers realise that these type of operations can complete their service loop.
Never bought from them and private equity means I probably never will. Somerset Bike Centre and Edinburgh Bicycle every time, depending where I am at the time. EBC has a pretty good online service too.
I've only been dealing with Wiggle for a year or so, but have been impressed with their service and prices - hope the new owners keep the free postage to Ireland in place.
Wiggle has been truly successful with so many imitators coming to market.
Even Rose are imitating by sending out the sweets now with orders.
For me their website needs an overhaul as it is starting to get a litte confusing to navigate.
DHB has certainly worked for them as a brand, quality products at good prices, they need to keep that part of the business going.
PS: could we have some free vouchers/tokens instead of the sweeties???
I hoped they used an offer voucher??
Or even quidco...I'd have a couple of percent on 180 million!!
online's great if you know exactly what you're getting. (A rear mech of make/model x is precisely that), but you can't beat trying on clothing/footwear.
Seconded.
Agree - but then trying on items before buying online isnt a way to support local business yet it still happens. It is all competition I guess.
I'm torn. Bike shops aren't open when I need them to be, don't carry enough stock etc. But I can't do all my own maintenance.
I'm sort of leaning towards relying on Wiggle/CRC for my bits and someone like Taylored Cycles
(http://www.tayloredcycles.com/) for maintenance jobs.
It annoys me when people use the word 'organic' like that.
Id guess the new owners would want to improve profit because their current profit figures are woeful for a company with that turnover (no doubt down to ridiculous price thrashing and raping of independent shops). The way to improve profit is to either improve efficiency (which being onine will be fairly tough as Id imagine they are quite lean at the moment) or to increase profit per sale...possibly more sensible pricing? There is always CR and other well knwon online retailers selling grey import parts to ensure you will get your cheap kit sans warranty.
Hmmm. 2010 £7.4 million earnings before interest, tax, amortisation and depreciation* on turnover of £55.6 million? That isn't shoddy, particularly for an online business with the trading conditions we've had the past few years. Looking at bottom-line profit profit isn't necessarily a guide to a company's value, particularly a private-equity backed one. ISIS and any other exiting shareholders certainly won't be complaining as they take their wheelbarrows full of fifties to the bank tomorrow.
As for "raping independent shops" - well, we're not talking about an Amazon.com that targeted the bike market, we're talking about a business that started as an LBS, and that spotted an opportunity early on. I think I read that Wiggle itself was founded with £20k, peanuts when you think of dot.com start-ups back then, and I imagine there's more than one LBS owner reading today's news and wishing they'd seen the potential.
One law of retailing is that if you understand your customers and give them what they want, you'll do well relative to your competition, even in hard times.
In the bike industry, as anywhere else, there's plenty who do just that - there's a lot that don't though, and some of them do need to up their game.
Yes, it's sad to see shops go, but there's usually a good reason behind it, and it's often down to failing to give a compelling reason for people to visit and spend money.
Okay, nowadays the customer can stand in a shop compare prices on their phone vs. online retailers - so give them a reason why they should shop with you, be it advice, service, personal touch, product knowledge, etc.
Basic retail skills which a lot of shopkeepers - or rather, the businesses that run them - in this country seem to have lost.
(I remember overhearing a customer being told that a 1-Megapixel digital camera was better than a 1 million pixel one "because the pixels are mega, innit?)
* EBITDA or EBIT rather than pre-tax profit is typically used by private equity firms in helping calculate enterprise value.
snipping "One law of retailing is that if you understand your customers and give them what they want, you'll do well relative to your competition, even in hard times." snipped.
Absolutely right. Bit of a Wiggle fan here......
Famous last words but I've yet to encounter any sort of upset with them.....
Internet shopping is evil and should be avoided. The end.
A fair generalisation perhaps - but when your LBS is Halfords ... let's just say you learn to do most jobs yourself
When even Foyles doesn't have the book you're after the internet comes into its own.
Well done Wiggle! A well deserved vote of confidence.
Agree, mad_scot_rider and current management staying on is a positive sign in that regard, I think.
ISIS will have have explored all option - potential flotation mentioned above, equally a trade sale could have been another option. From experience, I know there is an awful lot of work that goes into researching potential buyers and pitching a business at them.
ISIS invests in companies valued at £5m to £75m so in effect Wiggle outgrew it, and Bridgepoint is exactly the kind of firm that can help take it to the next level.
There's an interesting video interview with Wiggle CEO Humphrey Cobbold on the ISIS homepage by the way.
http://www.isisep.com/
A quick check shows Bridgepoint Capital are a quite diverse firm who seem fairly content to allow their owned businesses to keep running their own way as long as they are growing/profitable.
My only concern was they carry on being a good place to shop online for parts - and can't see this changing that any.
Well if they are worth that much I reckon we should get 2 packets of Haribo!