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

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?

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.

Not everything they do is stack em high sell them cheap.

some times it’s stack em high sell them eye watering expensive.

whilst it’s neither to my taste nor budget if you pop into a flannels you can see that as a group they can do high end.

It maybe they want the wiggle/crc/vitus/nukeproof to take the flannels position with Evans becoming a cycling sports direct.

or the purchase of vitus/nukeproof/ragley and any other IP gives them enough brands to stock Evans almost entirely in brands that they own reducing the reliance on other suppliers.

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.

I hope all the Nukeproof guys get fired up and someone starts up another company doing the same with the similar builds etc… a bit of a phoenix from the flames.

It’ll also be a shame for Vitus buyers as they were excellent value, but could massively benefit companies like Whyte who’ll now be in for a bigger share of the semi-budget market.

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

Hope you get a new job sorted out quickly Pugwash. Sorry you got let go. ☹️

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…