There are a lot of signs that the bike industry is going to struggle in 2023, so we thought we’d start a story to track some of the stories we hear about that take the temperature of what’s happening. Things like signs of cash flow problems, tales of supply chain delays, signs that overstocking is taking its toll, and news of buyouts and mergers are all expected to be regular occurrences this year. Many of these things happen in other years too, but we’re expecting the turbulence to affect big names as well as smaller players this year.
We’re still only half way through January, so let’s take stock of what’s already happened in December 2022 through to now. We’ll skip past November’s casualties of Stanton and The Bicycle Academy as we’ve already reported on those.
Reports that Giant delayed payments to suppliers
Over Christmas, Giant’s shares lost value amid reports in local media in Taiwan that suggested Giant had asked its suppliers for permission to delay payments to them. Local press said that this led to an official statement from Giant saying that Non-disclosure agreements prevented the company from commenting, and that it was unfortunate that the letter had been leaked.
Delaying payments to suppliers might be done to alleviate cash flow issues. It might also be done where the products are not required imminently – something which seems likely in this case, amid reports of overstocking across the bicycle industry. If you’ve still got products sitting in shops waiting to sell, you don’t need more of it leaving the factory and adding to your stock levels. We are aware that embargo/release dates for some Giant models have been pushed back by two months from their original launch dates, which may or may not be linked to the company’s payment issues.
Merida was also caught up in the market speculation, and its shares fell too amid concerns it might be exposed to overstock issues. However, it told local news that it was not seeking to delay payments to suppliers and cash flows are normal.
On 3rd January, Cyclesport North Limited – the parent company of Ribble Cycles – had a ‘First Gazette‘ posting issued against it by Companies House. Now that this has been issued, unless within two months cause is shown to the contrary the company will be struck off the register and the company will be dissolved. Accounts have been overdue since 31st October 2022, and we have been told that the notice is due to this delay, which is ‘due to the availability of the auditor’ (Past Auditor has been PWC). We’re told the accounts will be filed soon. Update, 20th January: The compulsory strike-off action has been discontinued.
Velovixen Enters Liquidation
Velovixen, supplier of women’s cycle clothing, announced on 4th January that it was going into liquidation. Citing ‘an unprecedented number of adverse forces’, the owners regretted the position they find themselves in.
…some of the factors include: the hugely increased cost of products; energy price hikes and their widespread damage; changes in customer behaviour, with ever-growing returns rates and appetite for discounts; far more expensive advertising rates; and the broader cost-of-living crisis.
At the end of the day, if a product is discretionary, then right now people are understandably looking to spend less on it. And, whilst we remain passionate about it, much cycling clothing is not absolutely vital for survival.Velovixen
We expect there will be other smaller brands who find themselves in similar situations this year. Remember to support the brands you love!
Shimano Delays Motor Delivery
Cy from Cotic informed his newsletter readers that Shimano has pushed back their delivery slot for motors and associated ebike bits from September 23 to June 24 at the earliest. We know that electronic chip demand across the world is high, and delays are being experienced in everything from cars to games consoles, so while it’s not entirely surprising to hear this news, it’s a sign that supply chains are still in disarray.
We’ll keep our ear to the ground for more news. If you’ve got a local bike shop that closes, add it in the comments section.
Specialized Lays of 8% of Staff Worldwide – Article Update, 12 January
Bicycle Retailer reported on 11th January that Specialized had announced 8% of job cuts, affecting staff worldwide.
Over the last three years, the industry has changed at an incredible pace and shown that cycling is more powerful than ever. It’s clear the time has come for transformation and shifts for the future.
This past week, Specialized made the incredibly difficult decision to say goodbye to 8% of teammates around the world. With the global economy changing faster than anticipated and rapid changes within cycling, the organization adjustment will allow the brand to be adaptive, whilst still investing in innovation.
“We are transforming the company around our purpose to Pedal the Planet Forward. Our priority is to better serve riders, retailers, and communities and to be the best place for our teammates to innovate and grow. The time is now to adapt to the current environment and ultimately led us to make some extremely tough decisions today. I want to recognize those teammates who departed and thank them for all their contributions, hard work, and dedication to Specialized. We are focused on ensuring that they are fully supported during this difficult time. It may be tough to see in the moment, but the future of cycling and the future of our brand is bright.”– Scott Maguire, Specialized CEO
Halfords Sales Reflect Economic Squeeze – Article Update, 17 January
Halfords issued a trading update which appears to show that the cost of living is taking its toll on its cycling business. Overall, cycling sales are down 21.2%, with growth in the auto side of the business offsetting these losses. Full story here:
Wahoo Credit Rating Downgrade – Article Update, 20 January
Wahoo’s ability to service its debt is in question following a downgrading of its credit rating to -CCC.
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