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

Brant probably has the sense to stay with clothes and not go anywhere near Ragley

What happened to the original business that started off CR?

Very long story, very short

started as a family owned LBS
Started doing Mail order
Became worlds biggest mail order bike shop, with its own brands, race team and distribution channels
Family sold to Wiggle
Owners of wiggle pulled their investment

The original LBS morphed into the CRC that we all knew, that they then sold to Wiggle. The family did well from the sale, the business not so much...

Fantastic, I have been desperate for more channels to buy crap Muddyfox seat covers from.

Elliot Heap and Nigel Paige have posted on FB & Insta that it's all over for the team etc.

Not sure where that leave Chris Cumming & Continental Nukeproof Factory Racing along with Danny Hart & Vero Widmann etc.

Not seen anything posted from the Nukeproof crew in Belfast etc., hope that something can come out of this as Nukeproof are (were...) doing some great stuff with kit and bikes.

My last 3 FS's (including my current carbon Mega) have been Nukeproof, I had a Scout hard tail and now have a Ragley Marley, and my Daughter has 2 Vitus bikes. Strange to think that those brands are no longer as they were a couple of days ago.....

I notice GMBN announced a new bike sponsor last Friday. I don't know if that was pre-emptive or Nukeproof had already pulled out of their deal. Blake's going to miss his Scout

If CRC\Wiggle administrators have let all the staff go it seems odd the website is still open for orders. Who is going to be picking/packing those? Do staff get given notice in this situation and are still working for a week or so? I would have thought the website would have been closed. There could be a fair few people not receiving their orders if they are not aware of the announcement.

From a business perspective this seems odd.

In the short term they still have stock to shift, which needs people to build bikes, pick and pack orders, etc.

I guess externally supplied stuff might go back to the supplier. But I wonder if that means they're going to send the rest to an auction house to dispose of in bulk. There must still be stock of some quite high value stuff as the fire sale seemed to be mostly Vitus MTBs (not road, Cx etc) which I assumed was to try and protect the core brands value. As well as crates of small parts.

The only LBS model I could envisage working would be a franchised screwfix style model with some stock and a lot more available next day and a mechanic to do the spannering.<br /><br />

Careful now, you’ve just described Halfords. 

Careful now, you’ve just described Halfords.

I lord - what have I done!

Though to be fair - that might just be the best we can expect.

And - whilst it doesn't need to be strapped to an automotive supplier, I can see it being more sustainable if the business does something else too in addition to bike and bike mechanics for an income stream.

I was actually thinking going the other way though - a sole trader outfit that were branded up as part of a larger 'chain' with some sort of common training and standards. Operating out of a cheap unit on a trading estate or a very cheap small retail unit BUT with access to a supply chain and pricing that a sole trader could only dream of. You have a single source for all your parts and don't have to deal with a myriad of distributors. Test bikes could be shipped to you for consumers to pay to take it away for a demo day/week.

Halfords MUST have considered it, but it would have a been a tight timeframe to reconsider their entire business model when it comes to bikes.

And maybe they think they can pick up plenty of the custom that Chiggle were getting anyway?

Mostly I think becasue Mike Ashley is a lazy “all somewhat successful High-Street businessmen must be soulless rapacious bogeyman” trope?

I mean if the baddies would just wear a topper, and hide behind a cape raised to just below their eyes, and perhaps even a maniacal laugh; it would all be much much simpler

Come on, he's not a very nice chap. Sure - no worse than Philip Green or Bezos, but that's no excuse.

https://www.independent.co.uk/news/business/news/sports-direct-mike-ashley-worker-conditions-minimum-wage-ian-wright-investigation-a7149971.html

https://www.theguardian.com/business/2017/jul/06/mike-ashley-high-court-sports-direct-newcastle-united

Halfords MUST have considered it, but it would have a been a tight timeframe to reconsider their entire business model when it comes to bikes.

They tried before and even they couldn’t make it work. They owned Cycle Republic but sold some off and closed the rest.

They already own Tredz for the online stuff.

onewheelgood
Full Member
I think the bike business should take a look at what the bookshops have done to stay in business against the might of Amazon. I can go to my LBS (Local Book Shop, the excellent Warwick Books) order pretty much any book that is still in print, and get a phone call the next morning to say that my book is ready to collect. I don’t know what miracle of logistics lies behind this, but if they can do it for books I can’t see why it wouldn’t work for bike parts.

I never use Amazon.

I use this, which is connected to most independent book shops.

https://bookshop.org/

I just tried to buy a set of pivot bolts and a hanger etc to future proof my wife's Vitus, and the order was immediately cancelled and refunded.

WTF is an IP?

WTF is an IP?

Intellectual Property

e.g. Names, logos, specs, designs, etc

Intellectual Property.

Lots of different types (Design Rights, Copyright, patents, trademarks).

I'm assuming here we are talking mostly about trademarks.

Funny how short some people's memory is.

Nukeproof and Vitus were both brands that existed long before CRC or Wiggle. After they died they were bought by a massive company, the same company that bought x-lite and killed that off too, that company then produced products that had little if any connection with the original products.

WTF is an 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 and Vitus were both brands that existed long before CRC or Wiggle. After they died they were bought by a massive company, the same company that bought x-lite and killed that off too, that company then produced products that had little if any connection with the original products.

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

They tried before and even they couldn’t make it work. They owned Cycle Republic but sold some off and closed the rest.

Bad timing though, and it was really just a slightly upmarket Bikehut aimed at commuters. It felt like it was really trying to go up against Evans for the city / commuter / nearest-to-a-train-station market.

Occasionally useful for click and collect of generic consumables at Halfords prices, but the in-store pricing was definitely "ohh you need these brake pads, cable or innertube, NOW?" "that'll be £££ please!"

And like Evans, they went out of business around the same time (just hat Evans got resurected as part of Frasers group).

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?

Something between that and Neil from SS's point about them apparently selling for less than their costs (pre-fire sale as well).

But I suspect probably more the former, and maybe one led to the other anyway?

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...

the in-store pricing was definitely “ohh you need these brake pads, cable or innertube, NOW?” “that’ll be £££ please!”

Pretty much like every LBS then. That’s the cost of maintaining a service on the high street.

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?

[blockquote] The only LBS model I could envisage working would be a franchised screwfix style model with some stock and a lot more available next day and a mechanic to do the spannering.[/blockquote]

Doesn't Madison do this already via Freewheel?

You mean Halfords?

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?

I'm not saying they weren't doing this, but before the panic sales of recent months it didn't really feel to me like they were much cheaper than everyone else.

I just kept using them because they were reliable, convenient and had good stock.

What timeframe are they supposed to have been doing this aggressive undercutting over?

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.

Doesn’t Madison do this already via Freewheel?

I think so...sort of, but not really. It's very Shimano/Madison only isn't it? No Sram or Campag. So if you were running a LBS and wanted to be able to supply all the components needed for anyone that walked in the door, you'd need to be look for other suppliers too.

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

[blockquote]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 [/blockquote]

AIUI

The top company seems to be in trouble, unable to raise more finances and stopped sending money down the chain.

The intermediate holding company they were ploughing money into has therefore folded owing a fortune.

At the bottom of the pile you have Chiggle that was making the losses but being kept afloat by money coming down the chain.

[blockquote]I’m not saying they weren’t doing this, but before the panic sales of recent months it didn’t really feel to me like they were much cheaper than everyone else.

I just kept using them because they were reliable, convenient and had good stock.[/blockquote]

You only need to be 1p cheaper to get to the top of searches.

And all that warehousing and stock that delivers the "value" to you as a consumer has a cost associated with it. Same with advertising, WC teams, etc that attract people to them over Merlin, etc.

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.

There were a lot of staff at Wiggle etc - if over 450 have gone apparently, they have likely kept some warehouse / pick & pack staff on to facilitate stock clearance.

I doubt tech support and warranty is going to be very forthcoming from now on put it this way, I would also probably thing twice before parting with a decent amount of money for anything, could all go pop at any moment now.

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

I ordered a jersey last night that had been sat in my basket for a while. Was despatched at 10pm apparently so someone was there last night at least.
Less than £20 though, wouldn't risk any more than that

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

Where did crc get stock from?

Taiwan? Bypassing local territory distributors and everyone assembling their bikes in the USA & Europe.

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

Just had confirmation my order from last night shipped tomorrow

They’ve got a fair bit of stock to shift yet to repay creditors, continue to trade in admin is the normal route in these situations

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

Ordered £20 quids worth of frame spares for my vitus substance yesterday and now dispatched.

Feel for all the staff and those associated now without jobs. Hoping it works out for them.

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

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

They haven't had a warehouse in NI for a few years - all based in the Midlands - Jct 10 M6......

“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..

Just seen this posted by Rob Sherratt on FB:

Some of you may know, I took a decision to leave my position with Nukeproof just before Christmas. With all that was going on I didn’t feel the time was correct to say anything at the time.

I don’t know what the future holds now for the brand, but I wanted to post something to thank everyone that’s supported the brand. I joined Nukeproof over 9 years ago and have loved ever minute of it and working with the people behind the brand.

I’ve been fortunate to have watched us lift world championships, worked with the best and most talented athletes, win amazing media reviews, and launch some incredible products. But our proudest achievement has to be the community that you all have helped create around the brand.

A huge thank you from me in helping to make Nukeproof what it was and for all the support. #itsanattitude

Cheers,
Rob
(Former Nukeproof global marketing manager)

Ps. If any of you find your way near a British Touring Car Race - feel free to pop past NAPA Racing and say hello.

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 fully expecting Nukeproof to continue producing bikes and retaining some key employees. It’s a well recognised successful brand producing cutting edge bikes and with a race team. It must be one of the jewels of Ashley’s purchase. Thoughts?

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.

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 sure there’s a rational plan, but I really have no idea what it is.

Could it be as simple as protecting his Evans investment by effectively preventing anyone else from using the Wiggle/CRC brands to compete with the online side of Evans?