Wiggle Chain Reaction Deal Falls Through: Mike Ashley Buys Name and IP

Idler Pulley. Nukeproof were going to put them on their new Mega, and had a massive order in. But now Mike Ashley bought them and is going to make his new Muddy Fox TopRider XT98 a high pivot frame instead.

Nukeproof V1 mainly made very light hubs that cracked quicker than an early 90s Cannondale. So in that case at least, CRC improved things.

Isn’t this mostly the result of private equity and leveraged buyouts destroying previously profitable companies?

Isn’t this mostly the result of private equity and leveraged buyouts destroying previously profitable companies?

I suspect the boom / bust of the pandemic is the root cause here. Company expands based on expecting boom to continue, boom turns to bust, company can’t refinance…

Private equity kept it afloat this long.

There’s several layers to how the holding company folded, but ultimately CRC was hemorrhaging a lot more cash than it eventually went bankrupt owing, the accounts and reports imply they kept paying their bills right up until the last minute. It became insolvent when the parent company of the parent company ran out of money to throw at the problem and turned off the financial taps.

The mismanagement aspect comes in when you have to ask to what end were they working, trying to undercut everyone else until they were the only large mail order co. remaining?

You mean Halfords?

I’m not sure we know the full facts of the finances etc. was Chiggle making those massive daily losses or were the profits being taken out to fund other areas of the business?
Happens with a lot of companies – use the profitable arm to fund/support the less profitable and hope that the tide swings and you can pay back or divert when that section of the business becomes profitable again.
Same happened with Westfield Sports Cars – they took out loans against and diverted profit from that section of the business to fund the autonomous EV business.

How are the websites still business as usual with nearly all the staff immediately laid off?

How are the websites still business as usual with nearly all the staff immediately laid off?

I don’t think they are… they just look like they are… I’d advise not ordering at this point.

If crc were largely selling surplus oem stock and the boom meant every manufacturer wanted more components to put into frames. Where did crc get stock from? Surely all the bike companies hoovered it all up rather than wait for extended lead times to deliver stock.

I do feel for the staff as I suspect the new owner will run it all from Evans warehouses i England at the expense of the staff in NI

How are the websites still business as usual with nearly all the staff immediately laid off?

As mentioned before, according to Cycling News they have kept on a handful of staff until the warehouse is empty.

My order yesterday got processed last night at 11pm and Evri have it for delivery tomorrow

chrismac – I don’t think CRC has been full of surplus stock for years has it?

Just a thought, presumably since Ashley has only bought the IP the stock is still “owned” by the administrators? So no real change there.

Frame despatched today having ordered before i realised they had gone pop.

“They haven’t had a warehouse in NI for a few years – all based in the Midlands – Jct 10 M6……”

This. The Northern Ireland operation shut down when wiggle bought them.

I believe the overall parent was massively in debt due to borrowing in the era of cheap money to buy/build property which a) hasn’t made the money expected and b) those loans have come up for renewal (like a 5yr fix on a mortgage) and the interest rates have gone through the roof. Lots of companies caught up in this vicious cycle. Massive multinational outsourcing and IT company Atos is in a similar position.

Whilst I’m no fan of Ashley, this bleating about buying a company and changing it is naive to the extreme. This has been going on forever. I don’t buy Cadbury chocolate any more because since the yanks took over the chocolate is even worse than it was. San Miguel isn’t owned by, or brewed, in Spain. And MG has nothing whatsoever to do with the UK. Or indeed its stellar heritage. You can’t even guarantee that the existing owner will maintain standards (see VW) it’s just the way it is. Caveat emptor is as true today as it ever was..

Wasn’t it that the ultimate big boss was a gazillionaire due to the housing/building stock he had in Sweden or Switzerland? Not necessarily cash rich but held huge value in stock that allowed him to borrow and guarantee against it (including the 120m CRC slush fund). Then the property market crashed leaving him with loads of property but no equity, which in turn meant he couldn’t re-finance after the interest rates went up. He could no longer guarantee the 120m so CRC went pop.

I’m struggling to see the advantage for Ashley here- his stackem high model might suit Evans, competing against Halfords, but CRC/Wiggle were largely mid/high end niche retailer. The only value of the brands is in those markets, unlike say Evans who have been a well known brand for years, and went through a ‘shop on every corner’ phase- basically the whole country knows they’re a bike shop. Unlike Wiggle, and especially CRC.
I’m sure there’s a rational plan, but I really have no idea what it is.

I’m struggling to see the advantage for Ashley here

Me too.

Muddy Fox I can understand. People who saw the Muddy Fox adverts on TV in the 80s as kids probably still have some association with the name being a good brand, especially if they never got into mountain biking as adults.

Therefore when these people are ready to buy their kids a bike the see a Muddy Fox for £200 they think, ‘Oh, Muddy Fox, they are a good brand.’

I really can’t see Vitus, Ragley, and Nukeproof having the same association for anyone other than people who got into mountain biking as adults and so know that a BSO with a known brand name is still a BSO.

Right this is what I can tell you, as of Wednesday 90% the staff have been made redundant, I was one of them. This is across all company. I also believe (unless they have signed a NDA) the all the design team at Nukeproof, Vitas, Ragley brand x, dhb etc have gone too so these brands are dead in all but name, its unlikely you will ever see them again in an LBS. Someone has brought the IP to the brands and the company but we were not told who but with a little digging it’s believed it is Sports Direct. If it is Mike Ashley he has just bumped of one of his competitors and WiggleCRC is dead as a brand name, it can only benefit his business. I also believe that WiggleCRC are trading until March to clear stock to pay creditors so there should be some amazing deals coming up.

Even though its out there the reason for the demise of the company is Signa Sports United pulled the 150 million Euro funding for the group over 2 years, this wasn’t just for WiggleCRC but for the European side of the business to, the hiking, golf shops etc.

I suppose this is the problem with investment companies buying business in booming industry, when it all goes to shit they pull out or refuse to support the business, I’ve seen it in the marine industry an investment company brought the 2 biggest wholesalers and merged them, within a year they were gone as the economy went into recession.

The sad thing with this whole debacle is a lot of good people have lost their jobs and these people are really passionate about the industry and the products they sell, Nukeproof is a good example of this, it was a riders brand designed by riders sold by riders and ridden by riders.

Sad times.

Sorry to hear of your job going @captain-pugwash.

That’s not Ashley’s business model. He buys the brand name and iconography, but dumps the people, products and support to sell rebadged catalogue products. If I owned a Nukeproof/Vitus/Ragley I wouldn’t expect any support from the new ownership at all, not spares or warranty. Of course we could all be pleasantly surprised, but it would run against his past behaviour.

The bike shop geographically closest to my house is an Evans, I haven’t spent a single penny there since they opened their doors, during the same time Chiggle have probably had the best part of a grand off of me. I think this may well be Ashley (or his advisors) recognising that the Frazer group ‘lose’ a good chunk of cycling segment sales to the likes of wiggle and CRC, same as most bricks and mortar shops.

Someone will know, what proportion of the cycle retail market does/did chiggle hold over the last decade or so?

Ashley is not going to be sentimental about the brands or people, everyone knows that’s not his MO, but he’s also never been that into the internet has he, so this is a change for him…