Support road.cc

Like this site? Help us to make it better.

news

Evans begins 70% off sale on old Wiggle stock – as it’s revealed Frasers Group paid just £3m for struggling cycling retailer after initial deal collapsed

A private equity firm had agreed a deal last year to buy Wiggle CRC as a “going concern” but pulled out at the last minute, allowing Mike Ashley to swoop in and purchase the brand’s intellectual property rights for far below the originally reported £10m

A massive clearance sale on Wiggle Chain Reaction outlet products has begun at Evans Cycles, with cyclists able to avail of discounts of up to 70 per cent on the ill-fated brand’s stock – in the same week Wiggle’s administrators revealed that Mike Ashley’s Frasers Group purchased the retailer’s intellectual property rights for just £3 million, far below the originally reported £10 million price and only after a private equity fund pulled out of the purchase at the last minute.

At the Cheetham Hill, Manchester branch of Evans Cycles, which forms part of Frasers Group’s vast retail empire that also includes Sports Direct and now Wiggle, local cyclist Arron Borson reported on social media that the entire top floor of the store was dedicated to Wiggle CRC outlet products, complete with a sign reading, ‘Wiggle Outlet sale, up to 70% off’.

According to the images, Kask Protone road helmets, which retail for around £200, are being sold for £40, while Arron said some e-bikes were priced at £250. The sale includes Castelli and DhB clothing, and boxes including smaller items and accessories such as pumps and lights can also be seen in the photos, with prices starting at just £1.

Wiggle clearance at Evans

The extent of Evans’ heavy discounting of Wiggle’s remaining stock will come as little surprise after it was revealed this week that Frasers Group completed the sale of the beleaguered retailer’s intellectual property rights in February for just £3m plus VAT.

That figure falls far below the sum, believed to be “less than £10 million”, first reported for the purchase, which marked the culmination of a turbulent period for Wiggle CRC after it was plunged into administration in the wake of the financial crisis that engulfed its now-insolvent Berlin-based parent company Signa Sports United (SSU). In comparison, SSU’s purchase of Wiggle CRC from Bridgepoint, in 2021, was reported to be worth around £500m.

According to a document filed at Companies House this week by Wiggle’s administrators FRP Advisory, outlining the sales process, of the 58 parties initially interested in purchasing the online retailer, 24 signed non-disclosure agreements while just seven met with the management team at least once.

According to the administrators, Wiggle CRC’s stock holding was valued at £22m in November and its intellectual property was valued at around £4.5m.

2024 Vitus Vitesse - 1

> Final clear out as Wiggle Chain Reaction Cycles invites bids for remaining warehouse stock

In December, one offer, made by a private equity fund with “global operations”, was accepted by the administrators, with a deal – which would have meant Wiggle CRC remained a “going concern” – set to be completed by 19 December.

However, despite the “considerable due diligence” of the administrators, the proposed purchaser withdrew their offer on the day the sale was set to be completed.

“As a consequence of this withdrawal, the administrators were forced to pivot temporarily to stabilise the business and ensure that Christmas trading could be maintained profitably,” the report says.

After the sales process recommenced in January, three parties remained interested in continuing Wiggle as a going concern, while one – which turned out to be Frasers Group – retained their interest in the company’s intellectual property only.

> Wiggle website relaunched following Frasers Group takeover (and the old orange logo is back)

While the level of interest indicates that there was a belief within the industry that Wiggle CRC could remain stable in the future, the administrators note that the inability to “right size” the company’s fixed overheads, and in particular its unwieldy IT infrastructure, meant that it could no longer be sold as a going concern.

According to the report, Wiggle’s IT infrastructure was “built on the assumption that the company would achieve sustainable annual revenues in excess of £1bn. In reality the company did not achieve these revenue levels even during peak sales through Covid-19 trading.”

“The inflexibility of the IT infrastructure ultimately caused the parties considering a going concern purchase to all fall away,” FRP Advisory said.

In the end, Frasers Group were able to swoop to buy Wiggle “on a gone concern basis” for just £3m plus VAT, adding its name and in-house brands to their bulging retail portfolio.

“An initial payment of £2.625m was paid on completion with an agreed retention to be paid once all necessary transfers of the intellectual property had been concluded,” the report says. “This aspect was successfully concluded and the balance of consideration has been paid in full.”

2024 Vitus Venon Evo GR - 1

An accelerated closing down sale carried out by the administrators, reported by road.cc, also ensured that FRP Advisory were able to “maximise the outcome” for the brand’s creditors, shifting all warehouse stock four weeks ahead of schedule.

Since its purchase, which included the rights for Wiggle CRC’s in-house brands such as Nukeproof, Vitus, Lifeline, and, DhB, Frasers relaunched both Wiggle and Chain Reaction’s websites in March, as part of its bid to “become the no.1 Sporting Goods retailer in Europe”.

Wiggle homepage March 2024

“Alongside the e-commerce relaunch, Frasers Group is looking to create commercial partnerships to enhance and expand these own-brand lines through development, sales, licensing, and international distribution opportunities,” the group said at the time.

“Wiggle and Chain Reaction are well established names among riders in the UK and across Europe and the acquisition of both brands is consistent with our ambition to become the no.1 Sporting Goods retailer in Europe,” Russell Merry, managing director of Wheels for Frasers Group, added.

“It also brings with it the opportunity to work with respected partners through the highly admired, award-winning product lines that Wiggle and Chain Reaction had built. We are excited to explore partnerships with suppliers or distributors looking to expand their offering or an organisation looking to get a foothold in the market by leveraging some established names.”

That relaunch took place after all 447 of Wiggle CRC’s remaining employees were laid off in February as the administrators “closed the shutters” in the wake of the intellectual property rights purchase.

The saga began in the autumn last year, with WiggleCRC entering administration and being put up for sale following a financial crisis that engulfed its Berlin-based parent company Signa Sports United (SSU), resulting in 105 jobs being cut at Wiggle, fellow online retailer Chain Reaction, and distributor Hotlines, and the company owing almost £27 million in debts to 400 creditors.

SSU’s crisis was prompted by its own parent company, Signa Holding, removing a €150 million funding commitment, plunging Wiggle and other cycling businesses such as Bikester, Probikeshop, and Farrhad.de into uncertainty.

SSU then filed for insolvency, ushering in administration and months of decline and redundancies for Wiggle and Chain Reaction, despite persistent claims from management that they were “optimistic” of a sale.

Wiggle Epic Winter Sale

> "The assumption was Wiggle Chain Reaction wasn't going anywhere": Ex-employee talks "shock" at retail giant's demise on the road.cc Podcast

On a recent episode of the road.cc Podcast, we heard from a former employee who spoke of staff’s “shock” at the retail giant’s demise.

“Everyone was convinced, this is it, we are one of the biggest bike retailers about. We’re about to go massive in America, then it was like ‘Oh, this might not be plain sailing, this is not good’,” the ex-employee, who worked for one of WiggleCRC’s in-house brands, told us of his response to the withdrawal of the funding commitment.

“But I don’t think anyone thought this was going to close the company. Suddenly the bubble burst, and you’ve got a train you've geared up to full speed, and you’re driving it flat out, then suddenly someone tells you you've run out of track. It was chaos, and you saw everyone hitting that. And I think the £150m combined with that – even with the £150m, there's no guarantee we would have survived. Maybe it got too big.”

The former employee said the “random” job cuts seemed “brutally handled”, with administration meaning staff members did not receive their minimum notice period either.

“So they went from ‘I have to get this report in by one o’clock’ to ‘sorry’. And fifteen minutes later they’re sitting in a car in the car park going ‘what has just happened?’,” he said.

“Everybody believed this was going to work. We were too successful, we make too much money, we were too good at this. It’s not like there was another competitor in the same market in the UK. You might be one of the unlucky ones who got cut, but the assumption was: Wiggle Chain Reaction wasn’t going anywhere.”

The ex-employee also claimed that staff were told that the company was likely to be sold to a private equity firm, and that management even insisted in meetings: “Don't worry, Mike Ashley is not buying us”.

“Even when we closed, there was no talk about Frasers Group, about Mike Ashley,” he recalled. “We found out through media outlets, which is wild.

“Right until the very end, there was the assumption someone was going to buy us. Because you can run a brand with ten people. And the idea that someone would surely love Vitus, NukeProof, dhb, one of these, surely someone would want to keep a few humans and those brands. But the fact everyone was let go means that those brands are gone.”

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.

Add new comment

9 comments

Avatar
Mr Hoopdriver | 2 weeks ago
0 likes

There is an article on The Register (think road.cc for IT people but with a 'slightly' more biting tone..)

https://www.theregister.com/2024/05/31/wiggle_it_infrastructure_sale/?td=rt-3a

with an alternative slant.  The comments make interesting reading.

Avatar
hawkinspeter replied to Mr Hoopdriver | 2 weeks ago
1 like

Mr Hoopdriver wrote:

There is an article on The Register (think road.cc for IT people but with a 'slightly' more biting tone..)

https://www.theregister.com/2024/05/31/wiggle_it_infrastructure_sale/?td=rt-3a

with an alternative slant.  The comments make interesting reading.

When I read "Oracle on Windows", I threw up in my mouth a little

Avatar
Midnight Rambler | 2 weeks ago
1 like

Evans in York closed down last year 

It wasn't a very customer friendly place. 

And no cycle parking outside. 

Avatar
brooksby | 2 weeks ago
0 likes

The Evans store in Bristol city centre, which has been going downhill more and more rapidly since the Ashley takeover, is now full of badly printed A4 notices saying that they are closing down and everything* is 20% off.

 

 

*Small print says, "Not everything"

Avatar
daccordimark | 2 weeks ago
0 likes

So the £3m deal was solely for the intellectual property rights? How come Frasers have got lots of Wiggle stock to sell then?

Avatar
OnYerBike replied to daccordimark | 2 weeks ago
2 likes

The Administrator's progress report states that after cessation of trading, bulk stock sales were carried out. It doesn't state who purchased how much, but it could have been Frasers Group purchased some/all of the remaining stock, separately to their purchase of the intellectual property. 

Avatar
stonojnr | 3 weeks ago
1 like

they still HAVE Wiggle stock ? after the amount of fire sale they went through in the last  6 months.

Avatar
Patrick9-32 replied to stonojnr | 2 weeks ago
0 likes

stonojnr wrote:

they still HAVE Wiggle stock ? after the amount of fire sale they went through in the last  6 months.

Yet more evidence for the "just charge less and you will sell more?!" people that lower prices aren't what's needed to clear stock backlogs in the current climate. 

Avatar
muhasib replied to Patrick9-32 | 2 weeks ago
0 likes

I bought some items in November and still found the website hard to navigate and search - for example you couldn't search on 'discount' , prices kept fluctuating daily by large margins so if the administrators had been trying to fully clear the stock it wasn't the way to do it.

Latest Comments