It was someone senior. I’m trying to find it but it basically said the Wiggle merger had been an absolute disaster

It was someone senior. I’m trying to find it but it basically said the Wiggle merger had been an absolute disaster

Wonder if that opinion was predicated mainly on the their job being duplicated and thus made redundant. They might have been absolutely right, but likely they just had an axe needed grinding.
They seem to have done just fine for the five or six years since the merger up to 23. Covid bubble might hide some of that of course but equally 22/23 is not a good time to be significantly in debt or in certain industries. There will be a lot of otherwise viable businesses in multiple sectors gone by the time all of this blows over.

Sure I saw it said that the Vitus frames are just off the peg catalogue jobs?

A long time ago. They’re very much designed by Chiggle now.

said the Wiggle merger had been an absolute disaster

When Bridgepoint bought them in 2011 it paid £180m (well over a 10x sales valuation) and had to beat off several interested buyers. When Signa bought Wiggle/CRC from Bridgepoint it settled over £300million in external shareholder and Bank debt..

had to beat off several interested buyers

There was stiff competition, eh?

“There was stiff competition, eh?”

Survival of the stiffest.

Bunch of children 🤣

There’s a few videos on YouTube touring the offices and talking about the design of their full suss frames. Maybe an elaborate rouse but seems genuine.

One thing that was mentioned on the owners group is the Escarpe and Sommet share a front triangle, which is entirely believable as the Escarpe head/downtube looks comically overbuilt with a 34mm fork.

How companies go from success to self inflicted suicide is often a retrospective article on the FT or a Radio 4 podcast. It’s both fascinating and sad to watch in real time via the medium of the company website.

One thing that was mentioned on the owners group is the Escarpe and Sommet share a front triangle, which is entirely believable as the Escarpe head/downtube looks comically overbuilt with a 34mm fork.

Carbon molds cost a lot. If you can use the same molds with new layups and inners to give different weights/rides then you can save a ton of money.

When Bridgepoint bought them in 2011 it paid £180m (well over a 10x sales valuation) and had to beat off several interested buyers. When Signa bought Wiggle/CRC from Bridgepoint it settled over £300million in external shareholder and Bank debt..

Isn’t that how private equity works? A PE company buy CRC, get CRC to pay for the loan for itself while the PE company strip out anything of value, often leasing property of other assets back to CRC at an inflated rate. Eventually CRC can’t handle the debt burden anymore and it either gets sold (to another PE firm to rinse a bit more value out of it) or liquidated.

Perhaps I am just a bit cynical about it all.

The old e Sommet / Escarpe certainly looked superficially similar to the Motobecane Hal E.. but there are differences like the rocker and seattube brace. Maybe there are just made in the same factory and share certain bits like the shock tunnel…

Isn’t that how private equity works? A PE company buy CRC, get CRC to pay for the loan for itself while the PE company strip out anything of value, often leasing property of other assets back to CRC at an inflated rate. Eventually CRC can’t handle the debt burden anymore and it either gets sold (to another PE firm to rinse a bit more value out of it) or liquidated.

Perhaps I am just a bit cynical about it all.

I often find that in business, a cynical approach is the best one to take…

I certainly remember a lot of people with more experience of big business than your typical bike trade bod (myself included) reporting that short term gain would likely equal long term pain for CRC when they were taken over by Bridgepoint back in 2011, and then again more so with the more recent Wiggle takeover.

The phenomenon as we know it is simply “boom and bust”… It’s ALWAYS far more healthy for your long term goals to build slowly and organically (as CRC did, relatively speaking, prior to the Bridgepoint takeover) than it is to hurry the process by bringing in outside investment…

for CRC when they were taken over by Bridgepoint back in 2011, and then again more so with the more recent Wiggle takeover.

Wasn’t it wiggle sold to bridgepoint in 2011, then crc bought in 2016.
Signa buying both in 2021.

Not that it makes much odds mind, your point stands.

Sure I saw it said that the Vitus frames are just off the peg catalogue jobs?

A long time ago. They’re very much designed by Chiggle now.”

Except the one that’s just a Project DC eh? We had it first so I can only assume Vitus copied us 🤣

Sure I saw it said that the Vitus frames are just off the peg catalogue jobs?

A long time ago. They’re very much designed by Chiggle now.”

There’s probably a fair chunk of that £300m down to goodwill and other intangibles. Pity the person who’s going to have the impairment review as to why the millions have evaporated.

How the hell does a business lose £1.5 million every week (£200k per day!)?? Mind boggling.

Wasn’t it wiggle sold to bridgepoint in 2011, then crc bought in 2016. Signa buying both in 2021.

Yes, apologies, got myself in a muddle there…

How the hell does a business lose £1.5 million every week (£200k per day!)?? Mind boggling.

We’ve all seen Wolf of Wall Street, right…? It’s not that that amount of money is being lost per se, it’s that the value of the business was at some time grossly overstated, but people bought into the hype, and the reality is now dawning as to how fragile the investment was for some given the fragility of the market currently…

I am not casting aspersions here, but if I didn’t know better, it would look like old school “pump and dump” tactics by money men who knew what they were doing!

How the hell does a business lose £1.5 million every week

On management fees to its owner? Owner’s happy, company then goes bust. Owner has made millions and does the same again. See also Evans of old

The rule of mergers is that benefits seem obvious, costs are hidden.

It’s also often a sign of a lack of ideas from management.

NYSE market price currently around 1.8c per share…

Closed at 9.4c per share yesterday…

ouch

They won’t be losing £200k per day everyday. They will have had loads of stock on their looks listed as assets at covid prices. At some point they will have admitted that they can’t sell eg a thousand mega frames for £3k each. When they admit that they can only sell the frames for £500 each they have to declare that as a loss in the value of the assets. For the frames that would be a loss of £2500×1000 so a loss of £2million. Repeat that across all the inventory you can see where the losses come from!

Sigma no doubt borrowed against the value of the inventory to fund their continued stream of acquisitions now will be in trouble. Wiggle CRC are such dominant brands and with a seemingly good logistical back end it’s hard to see them disappearing. A discounted sale, management buy out, pre-pack administration etc. feels more likely!

Agree with others, vitus is the budget brand with Nukeproof trying to compete in the mid market. As others have said, vitus frames tend to be either open mould or modifications or, like the escarpe and sommet, have simpler cheaper designs like the shared front triangle. These allow wiggle to sell decent bikes for cheap, but with more aesthetic/performance compromises. Nukeproof have custom frames and more marketing, dealers etc, adding cost but giving a slightly nicer product that they hope to be able to sell with more margin.

Minus that’s totally incorrect. The value of stock is at purchase cost not achievable value. To make a loss their sale price minus costs of sale must be negative 

According to accounts they have been losing money for years (obviously multi company opaqueness complicates things)  it’s easy to be number 1 when you make a loss on sales . Dominating doesn’t equal profitability 

I hate to know the cost of the marketing spend on their house brands and race teams. Sure it might increase sales but if you spend a million on adverts you need to sell 5 million more just to break even. Then when they dump their key products at manufacturing cost, it doesn’t even look like the brand is that attractive anyway 

yes they could be lining up for a prepack but who would want to pour a few hundred million into the already obvious money pit? Maybe when you can borrow at 0.5% but right now its brand value isn’t looking attractive value

neil SuperstarComponents 

Sure, that’s how it would work in a simple business. But my assumption would be that the manufacturing entity would sell inventory to the retail entity at close to the realisable market value, allowing the manufacturing entity to book a profit quickly (or at least offset some of the marketing losses) leaving the retail entity with relatively highly valued inventory. I have no inside insight though, so I could well be wrong.

I agree that sigma sports would be unlikely to come out of a pre-pack as is. Some of the brands will likely be sold off or parked, and the uk retail operation is likely to have to slim down potentially with different ownership than other parts of the existing empire. I’m not trying to say the existing business makes sense in its current form.

I agree that sigma sports would be

SIGNA Group, not Sigma Sports which is a completely different entity.

Maybe if they get Trump’s accountant to do the stock-take.

Anyways, when’s the CRC fire sale? Or should that be flood sale (slight return).

Errr CRC WIGGLE doesn’t make anything!

they buy it from vendors and retail it with a margin. So no minus that’s not how it works, quite the opposite. If you are both the manufacturer and retailer your stock is a raw material prices. You don’t make ANY profit till it’s sold, otherwise you would end up paying huge corporation tax for stuff in your warehouse!

so buy a frame for £500 inc shipping then sell for £1500 (inc vat). What they are doing is binning them out at say £400 so they make a loss to gain cash flow to pay bills. note all your other running costs are onto of this like shipping/staff/rates/property/packaging etc

so if they lost on average £200k a day then yes that’s what they have done

Margin is normally about 20-30%, I read last qtr signa group’s margin is negative 40% which is insane

neil SuperstarComponents

Errr CRC WIGGLE doesn’t make anything!

I presume he meant that “components ltd” could be making a pair of bars for £10, selling them to “cycles ltd” for £50, then the bike was sold to “shop ltd” for £3500, who sold it to Joe Blogs for £3500, and posts a £200k loss every day as a result. Where all three companies are owned by the same holding company intent on rinsing the asset of all it’s money then declaring some part of it insolvent, wiping off all the debt and keeping the rest.

It’s not unheard of, but you’d need to sit down with the accounts and nice fresh red pen to be sure otherwise it’s dangerously close to some very expensive liable.

A long time ago. They’re very much designed by Chiggle now.

Pretty sure someone said on the Vitus Rapide thread that the frame was the same as some other brand and could be bought direct from China? Could easily be mistaken though.

Pretty sure someone said on the Vitus Rapide thread that the frame was the same as some other brand and could be bought direct from China? Could easily be mistaken though.

They said on this thread – I stand corrected.

The UK’s use of financial reporting standards requires that stock valuation has to be at the lower of cost or net realisable value; so if there’s a drop in value below what you paid for it, you have to re-value your stock current asset there and then.  That can clearly affect a company balance sheet within the current year and knock a hole in your management accounts.

Now they could be doing some Starbucks esque profits shifting but that would show up in the turnover vs cost of sales on companies house. They appear to be operating normally in that respect 

so no. They appear to just be making losses. Also the group overall margin according to online is negative 40%, the whole shabang looks like they are liquidating stock for cash flow as corroborated by Signa press release comments about very negative cash flow 

so in summary it’s bad. Based on published public statutory information not hearsay or guesses 

talking with my taiwan friends they are all saying demands from crazy payment terms have been asked for, points to cash flow issues. Obviously this is third hand but I trust them as they have nothing to gain from their statements

neil SuperstarComponents 

For a long time they dominated the market, but it’s very hard to compete with the drop shippers.

Who are these drop shippers in the cycling world? Essentially doing to online retailers what those did to bike shops?

Always thought what would be left with if everyone bought £4 chainrings etc. from Aliexpress.

If this is all doom and gloom, what about the forum sponsorship and the prize draws here? Aware this is way down the line compared to other issues, but just curious about everything else tied into the company.

@bikesandboots

Who are these drop shippers in the cycling world?

Isn’t that what BikeInn etc are?

AliExpress etc is very interesting. I’ll be straight up it’s taken a huge chunk of our small item sales where people are only interested in price not quality. Hence our move to other markets. 

I read that 30% of ALL small packages going into the USA are shein and temu sales. This is utter insanity caused by low value import exemptions and state supported postage in China. The EU and eventually the U.K. solved the import exemption problem but they can still ship for less direct from China than within the U.K. to the U.K. 

before you get into the claims that these cheap goods are subsidised by the Chinese government as a proxy to harvest your data and put malware on your phone  . But the stuff is cheap…

basically if you don’t support U.K. businesses making stuff here and paying lots of taxes here, then they won’t be here in future. Then when you want government services paid for by companies taxes they won’t be here either. It’s your choice. 

neil SuperstarComponents 

I know I wildly speculated on the last thread about CRC/wiggle that signa might try to use them as some sort of bucket, to dump the wider group’s losses into a UK based business maybe. But could that be what they’ve actually done?

Insulate the rest of the group, internally sell stock at cost?, then allow discount sales to keep cashflow moving. then ultimately blame the self harming mentalists in Blighty, asset strip and then cut them loose? Are there any other benefits of bankrupting a business you happen to own in the UK Vs the EU?

I’m also pleasantly surprising that ST are okay with us speculating on the demise of the company that they’ve just taken on as a major sponsor for the site…

AliExpress etc is very interesting. I’ll be straight up it’s taken a huge chunk of our small item sales where people are only interested in price not quality. Hence our move to other markets.

The tide may be turning a bit here maybe…. I recently needed a 107BCD chainring – the only place I could find one was on Aliexpress @£40 or so. SS can surely compete with that?