Ribble Cycles sees "encouraging" improvement in performance after making £5 million loss in 2022

Ribble Cycles' latest accounts show the company suffered losses of almost £5 million in its latest financial year, and has undergone a restructuring to mitigate risk while reporting "strong volume in growth demand of 10%" for the first half of 2023.

The annual report and financial statements for Ribble's parent company Cyclesport North Limited in the 12 months to 6 November 2022 show a loss after taxation of £4,970,133, after the company made a loss of £325,072 in FY21. 

In the business review section of the document, Ribble's CEO Andy Smallwood said: "The challenges the business faced in the latter part of FY21 from supply chain disruption and uncertainty of lead times for inbound supply post COVID and Brexit continued throughout FY22. 

"As a consequence FY22 proved to be a challenging year and this is reflected in weaker sales performance, with customer confidence and therefore conversion negatively impacted by long lead times on bike availability and further uncertainty around delivery dates, as well as the impact of the wider macro-economic issues on general consumer confidence and disposable income. 

"Turnover declined by £1m (4%) in FY22 to £26 million and gross profit declined by £1.5m (15%) to £9m as a consequence of the full cost and operational inefficiency impact of the significant supply chain challenges. 

"The decline in gross profit flowed through to overall profitability along with increased operating costs the business incurred to manage the challenges, and as a result the Company delivered an operating loss of £5 million for the year." 

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Despite this, Ribble says it has "worked hard" to improve the performance of the business in 2023, seeing sales grow and rebuilding confidence with customers to make the company profitable again. 

Smallwood added: "The business has gone through a period of restructure to right-size and operate at an efficient and economic manufacturing level and thereby reverse the losses seen in FY22 and get back to profit for the future. 

"In addition, the business continues to invest in its systems, infrastructure and operational functions to support the drive for efficient profitable growth."

Delivery times: Ribble looking to "rebuild confidence"

Through a number of interviews and statements given to road.cc and other publications since 2021, Ribble has found itself defending long lead times for new models and delays in delivering bikes that customers had already pre-ordered or paid for. 

In early 2021, Ribble's Commercial Director David Stacey said the company was being "crippled" by shipping delays and container shortages brought about by the Covid-19 pandemic amid high demand, which negated a buffer in stock built up around multiple Brexit timing points, including the introduction of new tariffs and customs charges. 

In December of 2021, some Ribble customers complained about a lack of communication around delivery delays, saying they were being notified of further delays less than 24 hours before stated delivery dates. Ribble said it had "invested significantly" in its customer service team to make its communication channels "more robust", and created a dedicated section of its website pulling together ‘Best Availability’ bikes with the earliest dispatch dates.

Complaints about lead times at Ribble surfaced again in May of this year, with some customers saying their expected delivery dates had been pushed back without any notification. 

In the latest update on delivery times via the strategic report included in Cyclesport North Limited's full accounts, Smallwood said: "Supply chain predictability and availability is in a much better position in FY23 and the business is now in a position to offer robust delivery dates for customers and thereby rebuild confidence. 

"...Supply chain will continue to be a primary focus of the Company to underpin reliability and quality for the customer and thereby support the drive for sales growth, and the business will continue to ensure it is taking all steps to mitigate against future supply chain disruption." 

The future: credit risk "minimal"

With Ribble keeping positive net assets of £2 million due to nearly £10 million in loan funding being converted to share capital from its shareholders True Capital III LLP, the company's directors believe the "exposure of the Company to credit risk is minimal." 

On liquidity risk, Smallwood said: "If required the company has access to a mixture of shareholder loans and short-term bank facilities to ensure sufficient funds are available for ongoing operations and future developments." 

The average number of employees at Ribble Cycles increased from 195 to 234 last year. No interim dividend has been paid to shareholders for FY22, and the directors are not proposing a payment of a final dividend.