Wiggle Chain Reaction Cycles could be facing dire financial straits.
Signa Sports United (SSU), the parent company of Wiggle CRC and a host of other retail websites, has announced that its parent Signa Holding had terminated its commitment to provide equity to the company.
In a statement SSU said: “SIGNA Sports United N.V. (“SSU” or the “Company”), a specialist sports e-commerce company with businesses in bike, tennis and outdoor today has received a termination notice with respect to the unconditional Equity Commitment Letter from SIGNA Holding GmbH (“SIGNA Holding”), an affiliate of the Company’s largest shareholder SIGNA International Sports Holding GmbH (“SISH”).
“The Company has entered into a binding equity commitment letter dated June 26, 2023 with unconditional commitments by SIGNA Holding to provide the Company with additional liquidity of €150 million in the period from September 1, 2023 to September 30, 2025 (“Equity Commitment Letter”), supplemented by a side letter dated September 27, 2023, to cover the operational financing needs of SSU and to secure the going concern of SSU. Of the original €150 million commitment, €143 million remains undrawn to date. SIGNA Holding has terminated the Equity Commitment Letter.
“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. 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.”
At this time, the future of Wiggle CRC remains in doubt due to the withdrawal of this funding.
Wiggle CRC posted a pre-tax loss of over £92 million for 2022, compared to £14.5 million for the previous year.
It appears SSU will look to fight the decision, but it is a difficult time for the cycle industry.
The Bicycle Association (BA), the national trade association for the UK cycle industry, has published its detailed annual mid-year report for 2023, based on Market Data Service (MDS) sales data covering over 70% of the nation’s cycle revenues.
The 51 page report provides granular analysis of the challenges currently confronting the sector, with the total market value down 8% in the first half of 2023 vs 2022. The fall in volume of cycle sales impacted both mechanical and electric bikes, down 8% and 12% respectively.
Authored by the BA’s Head of Insights, John Worthington, the report finds that the first half of 2023 has seen a further deterioration in a market that in 2022 hit a 20-year low for mechanical bike sales. While the early summer saw an improvement to the underlying trend after a particularly tough start to the year, Worthington details the factors culminating in stock surplus challenges in the UK today.
Additional key findings include:
• Mechanical bike unit sales in the first half of 2023 are nearly a third down on the same period in 2019.
• E-MTBs are the only sub-category in the e-bike category that are up on the same period in 2022, pointing to struggles in the urban e-mobility field.
• The UK cycling market is projected to be worth £1.57 billion for the full year 2023, compared to compared to £1.55 billion in 2019.
• Within the PAC category, apparel has been hard hit, down 15% in value in the first half of 2023 compared to the same period last year, but technology has endured the strongest headwinds, languishing 34% down in the first half of 2022.
• UK e-bike sales have fallen further behind Europe, volumes declining and the gap to our neighbours in adoption of these products increasing.
“This latest report provides readers with the detail behind the headlines”, comments Simon Irons, BA’s Data and Insights Director, adding that “as such, it provides usable insights to guide decision making in challenging times, written by people with industry experience, tailored to the requirements of cycle industry leaders.”
While the first half of the report covers the full range of the cycle industry, the second part of the report includes a focus on the UK e-bike market with a concluding section on key drivers currently shaping the market, including bicycle supply trends, cycling activity levels, weather, macroeconomic factors, Cycle2work sales and second-hand bicycle sales.
“This report shows that the UK e-bike market offers significant growth prospects, but continues to lag behind much of Europe,” said David Middlemiss, Associate Director at the BA. “A core objective of the Bicycle Association is to work with the industry and government to position e-bikes as a key part of the UK’s electric transport future and the drive for net zero. E-bikes form the first of three key themes at the heart of the BA’s new Cycle Industry Growth Plan, now approaching the end of a hugely successful consultation period.”