WiggleCRC Administrators’ report: What does the future hold?

by and 23

We take a look at how the WiggleCRC administration process is going, and where we may be headed.

Followers of industry news will recall that the administration process of WiggleCRC was triggered when its parent company SIGNA Sports withdrew a €150m funding commitment.

On entering administration, the Administrators prepare reports which look at the assets and liabilities for the business, as well as looking for potential buyers to take on the business, or part of it. There are four separate companies in the UK that were part of SIGNA Sports: Chain Reaction Cycles Ltd, Chain Reaction Cycles Retail Ltd, Hotlines Europe, and Wiggle Ltd. These all fall under a group known as ‘Mapil Midco 1 Ltd’. In practical terms, Hotlines is the distribution company acting as the intermediary between brands and shops, CRC is the behemoth that buys products straight from the factories before they hit the CRC Retail Ltd and Wiggle Ltd websites/public facing part of the enterprise. The Administrator’s reports have been prepared for Wiggle, as well as Chain Reaction Cycles, Chain Reaction Retail, and distributor Hotlines. So far only the Wiggle report is online, but we’ve been sent a copy of the others. Although it’s all one ‘group’, the companies are based in different UK territories, meaning there are separate reports for different parts of the business. Altogether, it makes for some interesting reading – and an opportunity for some speculation as to what the future might hold.

The first figure that caught our eye is that there are only four entities with whom there is still ongoing discussion about monies owed. 89 ‘retention of title’ submissions were received – this is where a company or person tells the administrator that it believes it is entitled to monies, usually in respect of goods. The Administrators then reach an agreement with those entities – perhaps they hand back the goods, or they agree a payment plan with the entity. In this case, it appears that as of 20th December when the report was produced, 85 agreements had been reached, leaving just four remaining. This would appear to be a positive sign for the wider bike industry: if just four agreements remain to be reached, it seems likely that the other entities have had their financial exposure limited. Hopefully that means that fewer distributors will be subject to any significant losses as a result of the administration.

The next figures to catch our eye around around the potential purchase of the business. 24 Non-Disclosure Agreements were signed – although there are likely to be a few people just having a look out of nosiness. This led to seven parties meeting with the management team on at least one occasion, with interested parties due to submit funded offers by 4th December.

It seems likely that there were, then, seven parties with a serious interest in buying the business – or some part of it.

So who would want to buy such a thing, and what would it take?

The simplest option would be for someone to buy the whole group, plug that €150m gap, and continue to the run the business along similar lines as previously: big buying clout with factories, big internet presence, and a distribution network that can cater to shops and individual shoppers. Who has that kind of money, or a business it might make sense to augment with this?

The alternative would be some sort of break up of the business, with someone looking to buy one or more of the subsidiaries but not all of it. But if you look at the constituent parts, CRC Retail has relatively small margins – the profits are in the WiggleCRC element, with its massive buying capacity and links to factories. The Hotlines distribution function is also relatively small, and we know that trading is tough in the UK for bike industry distributors – as an investment, it’s hard to see who might want this capacity separately from the bigger WiggleCRC business.

The obvious name that’s doing the rounds on the rumour mill is Mike Ashley’s Frasers Group, which already owns Evans Cycles. This group has something of a reputation for buying up companies in administration, and the WiggleCRC group could complement the Evans purchase by increasing their online capacity and improving direct purchasing power from factories. However, this would be a shift in focus away from its traditional high street territory.

Another company in the right market and with the size to play at this level is Pentland Group, the majority stakeholder of JD Sports, which includes GoOutdoors, Blacks, Millets and more, and the owners of many well known brands, including Endura. Recent acquisitions by this privately owned company have been more brand rather than retailer orientated, although since WiggleCRC owns the brands Vitus, Ragley and Nukeproof, perhaps this wouldn’t be such a shift.

The other big player in the cycle market who might have funds of this kind is Halfords, which also owns Tredz. Although profits were down considerably last year, if the company had the money it would allow Halfords to offer a stronger range of bike brands, increase the online retail presence of Tredz, and potentially give the company another route via Hotlines into working with local bike shops – it already operates a form of co-existence through cycle to work scheme vouchers. It doesn’t take a great stretch of the imagination to see how Halfords could augment its value offering with bikes from Vitus and Ragley, while Tredz could up its race credentials with Nukeproof.

That gives us three companies we think might have the clout to at least make it to those meetings with the management team. So, on the basis that there were seven, who else might there be?

The Walmart group is already invested in cycling, with its purchase of Rapha being the headline there. However, that doesn’t seem to be turning into a major profit line, so we’re not convinced the company would be looking to make a purchase of this magnitude right now.

Thinking about it from the perspective of ‘online retailer’ rather than ‘cycling business’, as a bit of a wildcard, how about the ASOS major stakeholder Anders Polvsen? With fast fashion becoming less fashionable, putting your online retail skills into something perceived as green might not be a bad move. And he’s already the UK’s largest private landowner, noted for his rewilding plans in Scotland – making him well positioned to create demand for bikes by offering places to ride them…

Who else do you think might have the assets and business interest in taking on WiggleCRC into the future? With the deadline for bids set for 4th December, it seems likely that the administrators are already doing due diligence on a proposal, and before long we should know what the future looks like. Let’s hope it’s bright, and with a focus on bums on bikes.

This category can only be viewed by members. To view this category, sign up by purchasing Singletrack Membership.

Sleeping Out: Bonus Content | Amanda

What’s the chief thing you look for when choosing kit?I mostly care about how small it…

Singletrack Magazine Issue 119: Returning To The Dark Side

The former Red Bull trail opened in 1996 to wide acclaim as the first purpose-built trail…

Issue 152 International Adventure: Choosing The Right Path

Jonathan Kambskarð-Bennett took on unseasonable Moroccan weather and unfriendly dogs in order to get a glimpse…

Issue 148 – Interview: Who Is Dylan?

Words Fahzure Freeride Photography JP Gendron Competing in his first Red Bull Rampage at 30 years…


Countdown to membership cut off for the next print issue of Singletrack World Magazine

Check out your options


Author Profile Picture
Hannah Dobson

Managing Editor

I came to Singletrack having decided there must be more to life than meetings. I like all bikes, but especially unusual ones. More than bikes, I like what bikes do. I think that they link people and places; that cycling creates a connection between us and our environment; bikes create communities; deliver freedom; bring joy; and improve fitness. They're environmentally friendly and create friendly environments. I try to write about all these things in the hope that others might discover the joy of bikes too.

More posts from Hannah

Viewing 23 posts - 1 through 23 (of 23 total)
  • WiggleCRC Administrators’ report: What does the future hold?
  • twonks
    Full Member

    Interesting insight into things from somebody with more bike industry knowledge and information than the majority of the forum.

    If they have indeed handled a lot of their debts, it clearly shows that the wish to keep things alive and bridges not burned is strong.

    Personally I hope it comes out the other side, although I hope it isn’t Mike Ashley, albeit for non founded reasoning.

    It is a good follow from an outsiders perspective, but I’m sure as a collective we all wish it didn’t have to happen for the staff who are no doubt worried about their future.

    timf
    Full Member

    CRC and Wiggle could be separated with  Halfords or Frasers buying one of the brands and  putting Tredz or Evans web site behind it.      The other brand could be left with the warehouse, IT, staff etc.   

    Or possibly the administrator would get more by just selling the Wiggle brand, house brands and remaining stock to Frasers who already have a warehouse and IT system and the Chain Reaction brand to Halfords to put in front of Tredz.  

    1
    sillyoldman
    Full Member

    Repayments agreed doesn’t mean suppliers are being fully paid.

     

    I know of one supplier with a relatively small O/S of ~£3K who says he’s getting ~£300.

     

    A lot still to come out in the wash.

    BruceWee
    Full Member

    Interesting reading about Anders Povlsen.  I had no idea he was the single biggest landowner in Scotland now or that he had plans for rewilding.

    https://www.theguardian.com/uk-news/2019/mar/21/danish-billionaires-anders-and-anne-holch-povlsen-say-plan-is-to-restore-scottish-highlands

    I wonder if rewilding would be good or bad for mountain biking in Scotland…

    DickBarton
    Full Member

    Good I reckon…

    1
    garage-dweller
    Full Member

    A quick explanation of the retention of title (ROT) point in the report.  In case anyone’s interested…

    As a basic rule ownership of/title to goods in the UK passes on delivery even if they are not paid for at that point. It is possible to change that position by contract so that (in simple terms) ownership passes on payment – this is known as retention of title / ROT.

    By way of example…

    If you were a supplier owed £10,000 and had a valid ROT claim but you could only satisfactorily identify £500 of recoverable stock at the time of administration then the deal you would be doing with an administrator would be based on that lower amount.  The balance of your £10,000 debt would still be an unsecured claim.

    Just to be clear/avoid doubt this is intended as a general comment about what ROT is.

    sillyoldman
    Full Member

    Problem comes when a customer like this has multiple sources for a product/brand (like grey imports of OEM product) as they could, and do dispute ROT due to an inability to prove source of the product.

    1
    robertajobb
    Full Member

    I deeply hope it is NOT cAshley. For lots of well-founded reasons. 

    The supply chain / creditors will get a dicking over for starters. And any remaining staff.

    His modus operandi when you look at other previous acquisitions is about taking on no liability, wait until the fire sale to go in and get the bargain stock at pennies in the pound, **** to the creditors, and winning the race to the bottom.  Seems like a lot of people have VERY short memories when it comes to issues such as employment conditions and terms etc as applied to those in Shireoaks (the subject of a Parliamentary investigation, no less).

    https://publications.parliament.uk/pa/cm201617/cmselect/cmbis/219/21903.htm

    And even after that, more breaches

    https://www.google.com/amp/s/amp.theguardian.com/business/2017/sep/05/sports-direct-fails-2016-pledge-zero-hours-shirebrook-mike-ashley

     

    He has traded on the past quality and glory of long-dead British companies like Karrimor, Slazenger,  Dunlop, Lonsdale, and others, applying names to cheap far east shiiite.

    For me, it’s as simple as A-B-C.  Anything But Cashley.

    1
    scotroutes
    Full Member

    plans for rewilding

    It’s not just plans. Glen Feshie has been transformed and there is a massive amount of work under way on other estates.

    frankconway
    Full Member

    The 2 links posted ^ about Ashley/Sports Direct are more than 6 years old so I would question their relevance.
    Also, it’s Shirebrook not Shireoaks; it’s a shit-hole.

    fahzure
    Full Member

    Seems like Amazon could use the brands.

    BruceWee
    Full Member

    Good I reckon…

    Yeah, I would have thought so to.

    I just don’t trust very very rich people.  Even if they are Danish. So in my head I’m trying to think how we could be getting screwed over.

    But that could just be my paranoia.

    1
    DickBarton
    Full Member

    Rewild it all then slap some sort of change of use and then noone gets in…

    1
    MrAgreeable
    Full Member

    As above, I really hope Mike Ashley doesn’t get his hands on them. Failing that, maybe the next government will make zero hours contracts illegal and force him to rethink his business models… 

    https://www.theguardian.com/business/2021/mar/09/mike-ashley-owned-evans-cycles-to-axe-300-staff

    2
    flyingpotatoes
    Full Member

    Just been reading wiggle/CRC owed Haribo 20k!

    https://road.cc/content/news/wigglecrc-owes-haribo-ps20000-305947

    ped
    Full Member

    Recent acquisitions by this privately owned company [Pentlands/JD Sports] have been more brand rather than retailer orientated …

    They have Leisure Lakes and Wheelbase tho’ don’t they. A ready-made stronger online presence than they manage through these retailers might be worthwhile addition to their setup.

    1
    chakaping
    Full Member

    Just been reading wiggle/CRC owed Haribo 20k!

    This is real scoop :D

    1
    soobalias
    Free Member

    ffs, thats my annual intake of tangfastics (given my own way)

    2
    Mark
    Full Member

    They also owe a bike shop in Canada called Chain Reaction Bicycles £10k

    1
    stwhannah
    Full Member

    @ped you’re right. I’d missed that connection.

    1
    tomhoward
    Full Member

    Just been reading wiggle/CRC owed Haribo 20k!

    I’ve recently paid about £15 for 3kg of cola bottles. At that rate, thats 4 tonnes of haribo.

    *homer drool*

    Sandwich
    Full Member

    This is real scoop

    A very big one and the paperbag to hold them will need to be outsize too!

    2
    superstarcomponents
    Free Member

    I think the wording of the article needs to be careful about interpreting the very careful wording of an administrator. The retention of title questionaire spoken of is how you state what you own, it doesn’t give you it back. Resolved doesn’t mean paid. What it normally means is you agree sort of at gunpoint to getting whatever pence in the pound is left in the ashes rather than nothing. 

    An administrator ringfences the stock so for a limited time you can’t get it. Guess what happens next…. They flog it all as fast as possible to pay their bills before you can get a court order to repossess it. Technically you have to sue the customer who bought it to get it back!

    my guess how this ends up. It looks like all the stock has been sold now, they are tidying up ready to accept the highest offer for the IP such as brand names. Then the creditors will get 5% of what they are owed after several rounds of the administrator charging £750 per hour to do paperwork have gobbled up most of the money. 

    I suspect Halfords or Ashley will buy the shop brands to make a mirror of their current shops. Maybe nukeproof will be bought to peddle some generic stuff for a while before dying a painful death. Neither is worth seven figures so won’t dent the pile of debts which I doubt any have been paid till it’s finally wound up  

    if a good offer to buy as a going concern existed a month ago it would have gone ahead. We need to get out of repeating “huge buying power allows massive discounts”, it’s simply not true outside of grey market price shagging. The reality was it was cheap as it was sucking in tens of millions of loans from the parent company they didn’t have to pay back

    let’s wait and see

    Neil SuperstarComponents

Viewing 23 posts - 1 through 23 (of 23 total)

You must be logged in to reply to this topic.