Signa Sports United (SSU), the parent company of several cycling retailer giants like Wiggle and Chain Reaction Cycles has said that it is suffering from “severe liquidity and profitability challenges” as it announces the delisting of its shares, citing subdued demand, inventory overstock, and weakened consumer interest in the cycling sector which has impacted its overall performance adversely.
The decision to restructure has reportedly been influenced by the Berlin-based sports retailing giant’s performance in the first nine months of 2023, particularly as the “bike segment has continued to lag management expectations”.
SSU, which also owns other cycling e-commerce websites such as Bikester, Fahrrad.de and Probikeshop, besides also having operations in tennis and other outdoor sports, will delist its shares from the New York Stock Exchange. The company 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 around October 22, and it will subsequently also suspend its reporting obligations to the US Securities and Exchange Commission, which would be in the “overall best interests of the Company and its stockholder”.
SSU said in a statement: “The operating environment for the Company in the first nine months of FY23 and thereafter was characterised by a continuation of material disruptions which started in the second half of last year.
“Although some economic indicators across core markets have continued to improve slightly, the demand for the Company’s products remains significantly below 2022 and pre-pandemic levels.
“In addition, inventory levels across the industry remain elevated as market participants still aim to clear excess inventory, resulting in a material adverse effect on the Company’s gross margins and increasing negative cash flows.”
Wiggle and Chain Reaction Cycles, two of the UK’s leading cycling e-commerce sites had joined forces in 2016, merging to form WiggleCRC.
In 2021, it was announced that WiggleCRC would be taken over by the German online giant Signa Sports United — not to be confused with another UK-based retailer Sigma Sports. The acquisition of the UK business was said to be tied to SSU’s forthcoming NYSE initial public offering (IPO) at the time, and created a group with annual sales of $1.6 billion.
However, as the cycling industry still continues to struggle to come to terms with the post-pandemic slump plagued by overstocked inventories and supply chain issues, it seems that even the biggest retailers have been clawed down by the industry-wide trials and tribulations.
SSU had been trading on the NYSE since late 2021, just a few months after taking over WiggleCRC. At the time, its stock prices were around $9, but they’ve now fallen down to just $0.94, as per October 2023’s figures.
Wiggle, meanwhile, had undergone cosmetic surgery in April this year — the website ditching its iconic orange branding and quirky logo for a snazzy new green and blue theme along with a contentious new website, which cyclists and long-time customers from the website weren’t the most pleased with.
And a few days later, the newly face-lifted website, along with that of Chain Reaction Cycles, went down for a while unannounced, leaving even more people 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 per cent compared to 2020 and 2021), the company claimed its drop in international sales of 26 per cent 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.
SSU, meanwhile, has also announced that it is shuffling its Board of Directors, extending the scope of Torsten Waack van Wasen, CEO of Internetstores to become part of the company’s management team as Chief Performance Officer (CPO).
The German group said that van Wasen, with his many years of restructuring experience from his prior positions, will step into the role of SSU’s CEO in the first quarter of 2024, with the current CEO Stephan Zoll bidding adieu to the company after more than five years.
Adwitiya joined road.cc in 2023 as a news writer after graduating with a masters in journalism from Cardiff University. His dissertation focused on active travel, which soon threw him into the deep end of covering everything related to the two-wheeled tool, and now cycling is as big a part of his life as guitars and football. He has previously covered local and national politics for Voice Wales, and also likes to writes about science, tech and the environment, if he can find the time. Living right next to the Taff trail in the Welsh capital, you can find him trying to tackle the brutal climbs in the valleys.